Technical Indicator Goes Bearish

In addition to the current overbought condition in the market, potential chart resistance and a 28% rally in a little over a month the bulls may have gotten a little ahead of themselves in the short term with their exuberance for the rally.

Bloomberg has the lowdown on an important sentiment indicator, the difference between bullish and bearish investors as measured by the American Association of Invidual Investors. Let's compare the extremes in this indicator with the recent short term tops and bottoms in the market.

Below is the Bloomberg chart of the difference in bulls and bears in the AAII survey. The green arrows represent lows or buying opportunities in the short term while the red arrows represent market highs and profit taking opportunities.