For the second week in a row the AAII (American Association of Individual Investors) Investor Sentiment Poll shows that the percentage of bulls and bears are about equal, resulting in a Bull/Bear ratio of 1.0. This is a mildly bullish reading, but it is a far cry from what we typically see at important market bottoms, such as the readings at the 2009 and 2010 market lows. While the percentage of bulls has contracted from optimistic levels, the percentage of bears is on the low side of the range. This says that investors are cautious, but not particularly fearful.
The AAII poll has a Wednesday cutoff, with participants voting throughout the week--bull, bear, or neutral. While they register their outlook for the next six months, the erratic weekly results clearly show that sentiment tends to be swayed by short-term market swings.
Conclusion: As I write this the market is open and experiencing heavy selling; however, yesterday's AAII Investor Sentiment numbers do not support the idea of an extended sell-off.