10/9 Market Psychology

Written on October 9, 2010

Hello-

Pre-election…consensus among individual investors is now fairly bullish. Options are pricing in the least amount of risk in the last 5 months. All assets have risen…

If you caught this move since late AUG, congratulations it is the finest move the market has made in SEP since the 30’s. The DJIA went from 10,000 to 11,000 in one month. US 10 yr Treasuries dropped to lows of 2.35% and gold hit a new record high.

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.
Last Week's Results
Sentiment Survey ResultsWeek ending 10/6/2010
Bullish	49.0% up 6.5
Neutral	23.2% down 2.6
Bearish	27.7% down 3.9

Options are pricing in less risk.

Book a little hedge a lot.

Leon