The following info is from Market Harmonics and refers to U.S. stock markets.
Each week the service Investors Intelligence surveys some 140 financial
newsletter writers to determine whether they are leaning bullish or
bearish in their opinions to subscribers. The resulting Investors
Intelligence Survey compiles the data to arrive at a weekly percentage
of bulls v.s. bears. The Survey is considered a contrarian indicator,
since extremes in either direction are signals of reversal of the
market’s current trend.
This is a weekly chart of the Bull/Bear Spread, which is specifically
used
by Investors Intelligence to measure sentiment. According to Investors
Intelligence,
"Historically, bulls are 55%-60% when indexes achieve record highs, and
those extreme levels of optimism often prove negative. They reflect
fully invested positions. High levels of bearishness are usually
positive because they most often occur after a major market decline, and
reflect that there is plenty of cash on the sidelines. During the range
bound market over the last few years, advisors had maintained a bullish
bias, and short term opportunities have been indicated after the spread
between the bulls and bears contracted to 15% or lower, and then
expanded."
