II % Bears below 20%; Bull/Bear ratio not yet overbought

Market Analysis | United States
13 March 2013
Stephen Suttmeier, CFA, CMT

􀂄 % Bears at 18.8%, a contrarian bearish sentiment condition
Investors Intelligence (II) % Bears moves to 18.8% and to a contrarian bearish
level below 20% for the first time since April/May 2011 (chart below). Sentiment is
a condition indicator and contrarian overbought readings can last weeks and even
months. The last time % Bears was below 20%, II Bulls vs. Bears (Bulls divided
by Bulls + Bears) was also at contrarian bearish readings above 75% (side bar
chart). This time, the Bull/Bear ratio is 72.7% and not yet overbought. In April/May
2011, % Bears reached a low of 15.7% and Bulls vs. Bears hit a peak of 78.5%.
Sentiment is stretched, but may still have room to run before becoming extreme.
S&P 500 uptrend intact with breadth & volume confirming
Last week’s breakout above 1530 is intact and targets 1550-1576 or important
resistance at the longer-term range highs. The uptrend for the S&P 500 is set up
to continue, given confirmation from market breadth and volume indicators that
measure net accumulation or buying, such as our Volume Intensity Model and onbalance-
volume (see our Market Comment). A break beyond 1550-1576 would
target 1600-1625. Support is 1530-1525 – holding above this level keeps last

week’s breakout intact and the pattern bullish. Additional support is 1500-1485.

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