Investor Sentiment Still Below Recent Highs

There's no denying the fact that investor sentiment has turned more bullish over the last several weeks.  In the latest surveys from Investors Intelligence (II) and the American Association of Individual Investors (AAII), over 50% of newsletter writers are classifed as bullish (II) while 48.5% of individual investors (AAII) are also positive on equities.  However, two trends in these surveys are worth noting.  First, bullish sentiment in both surveys remains below highs made in late December/early January.  Second, the graph of the II survey shows the lack of conviction on the part of many investors.  As quick as they have been to embrace rallies, they have been just as quick to abandon them.  Over the span of just a few weeks in January and February, the II survey declined by over 35% from 53.4% all the way down to 34.1%.

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