|August 31, 2011. This is a graph
the weekly Investors Intelligence Survey Bulls
minus Bears Sentiment data from 1988 to today
plotted against the weekly DOW (Dow Jones Industrial Average) ending
with yesterday's close.
Intelligence Sentiment Indicator:
“Investors Intelligence Survey“ or IIS is one of the oldest weekly
sentiment indicators used today. Charts of the Investors’
Intelligence Survey (IIS) “Bulls over Bulls plus Bears” versus the
market are key tools for stock market technical analysis or
sentiment. The IIS began in January 1963 by A.W. Cohen and has
been published every week ever since.
The IIS questions stock-market newsletter writers once a week to see if
they were bullish or bearish on the stock markets in the near-term.
Newsletter writers have a large following as a group and are thus
considered “market experts.“ Cohen thought he could survey these
"experts" to find out when it was best to be long or short the
markets. Before he started, Cohen expected the best time to be
long would be when the most advisers were bullish. Cohen was surprised
to find out that the newsletter writers, just like average investors
and speculators, were usually wrong at major turning points!
Cohen found the best time to go long the stock markets was not when the
most advisers were bullish, but when they were bearish! Cohen’s IIS
survey turned out to be a wonderful contrarian indicator!