Longer term investors have to like this bearish newsletter sentiment. This has been a really long period of bearish outlook by newsletter writers, nicely setting up for the next market bottom. From a contrarian point of view, this data is highly favorable for stocks.
At the moment though, this isn't the most important information because there appear to be other factors which trump the sentiment survery... for now.
Insiders are generally considered to be very smart when it comes to the prospects for their own companies. The writer's survey is a contrarian indicator, and the insider ratio is not. In other words, invest in the same direction as the insiders.
The insider data isn't as favorable as it once was according to Investor's Intelligence, " (insiders) increased sales when markets rallied to May highs. The new selling is occurring as markets fall and that is not a good sign of insider confidence."
Seems to me the insiders have been late to discover the housing crisis, the oil crisis and now the world wide economic slowdown. These are still very favorable levels, but the trend is a bit wrong as the insiders were a lot more aggressive buyers earlier in the year. I still think the insider actions favor the longer term for stocks but perhaps not the shorter term.
When it comes to the short term, this chart has me concerned. Longer term it is favorable according to Bob Brinker as the uptrend in puts versus calls indicates anything but complacency when it comes to stocks.
But the shorter term waves in the longer term uptrend indicate intermediate highs and lows in sentiment, and right now the shorter term wave remains stubbornly at the wrong level in order for stock prices to advance. The equities only ratio is more favorable for stocks, but I haven't found it as useful for monitoring the market as the total put/ call ratio.
I'm not exactly sure what to make of this to be honest considering how weak stocks have been and considering how long this indicator has been in the unfavorable range. There is other evidence that the market is setting up for the traditional late year rally, but I'd feel a lot more comfortable about those prospects if investors were heavily buying puts to protect their holdings at this point.