It\u2019s time for a bear-busting rally.<\/p>\n\n\n\n
The American Association of Individual Investors (AAII) reported yesterday that over 60% of its survey respondents were bearish on their outlook for the stock market for the next six months. Only 19% were bullish.<\/p>\n\n\n\n
That\u2019s the most lopsided report we\u2019ve seen in several years. And from a contrarian perspective, it\u2019s bullish.<\/p>\n\n\n\n
Back on November 13, 2024 \u2013 following the large, post-election rally that pushed the S&P 500 above 6000 for the first time ever \u2013 bulls outnumbered bears 50% to 28%. From a contrarian perspective, that was bearish. And stocks have struggled to make any headway since then.<\/p>\n\n\n\n
Now, with the S&P 500 still stuck near 6000 and trading down just 2% from its all-time high, the vast majority of investors have turned bearish. It\u2019s remarkable that two months of choppy, back-and-forth action can create that drastic a shift in sentiment. This is the sort of bearish reading we\u2019d typically get following a 10% to 15% decline in the market.<\/p>\n\n\n\n
So, there\u2019s plenty of fuel to power the stock market higher from here.<\/p>\n\n\n\n
Look at this chart of the S&P 500\u2026<\/p>\n\n\n\n The index closed Wednesday right in the middle of its two-month-long trading range. The momentum indicators at the bottom of the chart are in neutral territory. So, the chart itself doesn\u2019t favor either side. There\u2019s an equal probability the index could break down from the trading range and decline toward 5700, or break out to the upside and head toward 6300.<\/p>\n\n\n\n![\"\"](\"https:\/\/jeffclarktrader.com\/market-minute\/wp-content\/uploads\/2025\/02\/image-19-1024x934.png\")
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