Bull Bear Ratio

Overview

Once a week a poll is conducted by Investor's Intelligence of over 100 top investment advisors.  The poll asks the advisors whether they are bullish, bearish, or neutral on the market.  The survey is released every Wednesday.  This relationship between bullish and bearish advisors is quantified in the bull/bear ratio.  Below is the formula for the indicator:

Interpreting the Bull/Bear Ratio 

There is a a saying on Wall Street that in order to make money in the stock market, you must go against the crowd.  Well, experts are not excused from this old adage.  When the bull/bear ratio reaches extreme bullish readings, it is often an early sign that the market is due for a sell off.  Conversely, if the bull/bear ratio has extreme low readings, a bounce is in order.  Historically readings above 60 percent are a sign of extreme optimism and readings below 40 percent reflect extreme pessimism. 

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