Monday, July 12, 2010

Small Investors Flee Stocks

The image immediately above this text appears on page 1 of today's Wall Street Journal. The graph within this clipping depicts the net weekly inflows into mutual funds which invest in the U.S. stock market. The latest downward red spike in this graph shows a greater outflow than in any week since the bear market ended in March 2009. One can infer from these data that small investors are quite pessimistic about the prospects for the U.S. stock market.

The chart at the top of this post comes courtesy of It shows the results of the weekly investors survey conducted by the American Association of Individual Investors. The latest reading shows the greatest percentage of bearish opinions since the March 2009 low.

These data show that the actions and expectations of small investors are in sync to the bearish side. The extent of bearishness is comparable to that seen at the March 2009 low point. I can only conclude that the bull market that began then is still underway and that the S&P has started an advance that will take it well above the 1300 level.


  1. E-Mini S&P 500 September 2010 Options
    Call Premium Total:
    $748,290.00 Call/Put Ratio:
    0.86 Put Premium Total:

  2. Carl, if this is not the ultimate contrarian indicator, I don't know what is. I hope this will finally make you change your mind :-)

    Cramer: We’ve Seen Lows for the Year