According to today's Investors Intelligence survey the number of investors that say they are bullish on the market when polled has dropped to 44.3%. This is the lowest number of bulls they have found in the market all year and is a retreat from the highs of 54.7% they found in February.
The number of people that are bearish though has dropped too to a level of 19.6%.
If the bulls aren't becoming bears than what are they doing?
They are expecting a correction, with the percentage of people saying they are looking for one now at 36.10% - which is the largest number of people looking for a correction in this survey since the last week of November in 2012.
Ok, so why is this important?
Normally at market peaks you get a huge number of bullish respondents and in bear markets a lot of time people stay bullish during declines.
All it has taken is a quick drop off the highs to shake a lot of bullish sentiment out of the US stock market.
I take this as evidence that the stock market is not on the verge of some huge correction or crash right now. If the market is going to have one this year, and usually it does have at least one 10% correction every year, it would have to first be preceded by weeks of sideways action to form a top.
There is just no sign that we are on the verge of a big drop now, and from a contrarian standpoint when everyone starts looking for something it usually doesn't happen...
This is not a market to be scared of. It's not one to be excited about either though since valuations for US stocks are high and the S&P 500 has already been going up now for four years. Trading is one thing, but if you want to invest its much easier in the long run to do so in market at the start of new bull markets or after they have crashed.
I don't think the US stock market has huge downside or upside now. Instead I just think its going to do very little the rest of the year.
Gold and silver provides a more compelling investment entry point now than the S&P 500 and DOW do despite what you may hear on CNBC or see on the cover of this week's Barrons:
