We have some interesting AAII numbers. Before you get all bulled up on these numbers, remember that in bear markets, there is a consistent lack of bulls and bearish sentiment is persistent.
50 week SMA of AAII Bulls
50 week SMA of AAII Bulls/Bears ratio
While bearishness in AAII numbers seems to be elevated, it is nowhere near as extreme as the drop in AAII Bulls. This means there are few bulls (buyers) left but also not many bears (shorts) exist.
In fact when we look into Rydex numbers, we can see that there is an extreme case of lack of bears.
5 SMA of inverse Rydex Cumulative Cash Flow Bear and MM funds
We can also see a similar behavior from insiders. Since late 2014, they are not buying
And 40 week SMA of Wall Street Bulls/Bears is about to drop to the level where large corrections / bear markets began
40 week SMA of Wall Street Bulls/Bears
So my conclusion is: Bullish sentiment numbers dropped significantly over the last year but there is no proportionally extreme bearishness. When we look into Rydex money flows and allocations, we see a contradicting picture, an extreme case of lack of bearishness in actual investments. Are people not bullish but staying excessively long? This is a recipe for a sudden awakening move.
Unlike many blog and article publishers who post a bearish piece then states they are long stocks, I like to finish by saying that my current read on the market is decisively bearish and I am short index futures.