Is Positive Market Another Head Fake?

Summary


Contrary to most past Septembers, so far September this year has been a boon to the stock market with the S&P 500 up just shy of 7 percent for the month to date. As a result of that strong showing, the index has crossed into the black, up 0.6 percent for 2010 to date. Despite the so-far strong September, the fact that the S&P 500 is barely up for the year is a reminder of how volatile the stock market has been since January and over the past 36 months.

One has to wonder what is driving the strong performance or whether it's yet another head fake.

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Extract


Is Positive Market Another Head Fake?

One metric to look at in this case is the American Association of Individual Investors (AAII) Sentiment Index Ratio. This is a ratio based on a weekly survey of hundreds of individual investors and it calculates the percentage of respondents who claim ...

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