Folks are bearish<\/a>… The American Association of Individual Investors (AAII) reported last week that the percentage of survey respondents looking for a rally in stocks over the next six months was just 19%.<\/p>\n Those looking for a decline topped 43%. That’s the lowest percentage of bulls<\/a>, and nearly the highest percentage of bears, in two years.<\/p>\n That means we’re probably not far away from the start of a rally…<\/p>\n Investor sentiment is a contrary indicator. When everyone else is bullish, it’s usually a good time to be cautious. And often, the best time to put money to work is when everyone else is bearish.<\/p>\n Many folks turned super bearish on Friday. So bearish in fact, that the CBOE put\/call ratio<\/a> (CPC) spiked to its highest level since the stock market meltdown that kicked off 2022.<\/p>\n Let’s look at this CPC chart…<\/p>\n (Click here to expand image)<\/a><\/p>\n The CPC is a short-term contrary indicator. It compares the volume in call options<\/a> to the volume in put options<\/a>.<\/p>\n A reading below 0.80 (red line) shows extreme bullishness – meaning folks are buying a lot more calls than puts. A reading above 1.20 (blue line) shows extreme bearishness as speculators jump over each other to buy puts.<\/p>\n Friday was the second time in two years that the CPC jumped above 1.20.<\/p>\n Nobody was “buying the dip” on Friday… Most folks were buying puts and betting on even more downside in the days ahead.<\/p>\n![\"\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202204\/20220425-mm-01_sie234.png\")
<\/p>\n
![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/p>\n