Stock Traders: Switch Bias To Neutral Or Bearish Mode

Chris Ciovacco submits: Early September is very important for the financial markets; especially for the bulls. Numerous elements are in place for a rally to take hold now. The markets have been weak and the bears have been in control. If the bulls cannot make a stand soon, it will be a bad sign for risk assets. The good news for the bulls is several factors, across numerous markets and asset classes, are pointing to a possible rally in risk assets:

In recent years, we've seen the economy slow and the stock market turn during the spring. Economic reports are piling up to suggest the U.S. economy is heading for yet another spring slowdown.

By AAII: Neutral sentiment is at highest level since December 22, 2011 in the latest AAII Sentiment Survey. The rise in neutral sentiment is occurring as both short-term optimism and pessimism are falling among individual investors.Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.9 percentage points to 35.5%. This is the third consecutive weekly decline. It also puts optimism at its lowest level in a month. The historical average is 39.0%.

Gold traders are divided on the outlook for prices, balancing central bank concern that more economic stimulus is needed against signs of recovering growth that spurred the longest run of monthly losses since 1997. Fifteen analysts surveyed by Bloomberg expect prices to gain next week, while 14 were bearish and three were neutral. They were mostly negative the previous two weeks and evenly split the week before that. Bullion fell for a fifth straight month in February as investors sold the most metal ever from exchange-traded products, data compiled by Bloomberg show.

By Mark J.

By AAII: Bearish sentiment rose to a seven-month high, while bullish sentiment fell to an eight-month low in the latest AAII Sentiment Survey.Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 10.0 percentage points to 25.4%. This is the lowest level of optimism recorded by the survey since September 22, 2011. This is also the sixth consecutive week that bullish sentiment has been below its historical average of 39%.

Richard Suttmeier submits: On Tuesday I published the first five of my eleven themes for 2011. Number One - Home Prices will resume a decline that began in mid-2006.We had the home buyer tax credits expire in mid-2010, and government sponsored mortgage modifications provided limited help.In 2011 we face continued foreclosure issues including questionable documentation, and banks have a record high Other Re

The Pragmatic Capitalist had a recent post calling attention to a James Altucher question, “Why Do Bears Seem Smarter Than Bulls?” In response to Altucher, TPC was more generous than I will be. This post recaps my spontaneous take in the TPC comment thread.