Hard To Believe

In the latest week the number of bears in the Investors Intelligence survey actually increased to 46.3%, while the number of bulls remained the same. This survey is likely dated by a few days but the sustained level of bearishness despite this rally is quite amazing.

There is some evidence that the bears are pulling back. Rydex data is the most up to date as it is updated every night. At Rydex the leveraged bears have largely given up  in the past week. Overall positioning of Rydex traders is still on the bearish side. The put/call ratios  have showed sustained put buying throughout this rally as well. The majority of the evidence points to bearish sentiment.

It seems we are gapping up again and the risks of a short term pullback are increasing. However, with so much bearishness out there and strong seasonality a couple of weeks away I believe the bulls still deserve the benefit of the doubt in the intermediate term.

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