Bearishness Rises Among Newsletters

The bear ranks continue to grow, at least among investment newsletter writers surveyed by Investors Intelligence.

The percentage of newsletters considering themselves bullish, or optimistic, on the market fell to 33.7% in last week’s survey, the lowest since August 1997 and down from 35.7% the previous week.

Newsletters in the bearish, or pessimistic, camp rose to 42.1% last week from 37.6% the week before.

Those newsletters that aren’t bullish or bearish are relatively neutral on stocks, expecting a modest near-term decline at worst.

The bearish camp has outnumbered the bullish camp for two straight weeks. The last time bears outnumbered bulls was in 1998.

The Investors Intelligence newsletter survey has often proved to be a “contrary” indicator: When bullishness among newsletters has been high it has often presaged a market peak; when bearishness has been high it has often presaged a market bottom.

But analysts note that the threat of a military conflict between the United States and nations said to harbor terrorists has introduced an element of uncertainty into markets that makes it risky to rely on historical indicators.