Pros Vs. Joes

Years back there was a program called Pros Vs. Joes that pitted mostly middle aged former professional athletes against mostly middle ages former high school all-start in feats that ranged somewhere between Battle of the Network Stars and American Gladiators.  It was a tepid program at best and I willfully admit to watching an entire marathon one Saturday afternoon because I needed something to distract myself after finishing a turn of Civ III, or a cigarette or a beer.

I didn't know whether to cringe at the deterioration of the Pro or laugh at the near futility of the Joe or feel completely ashamed of myself watching this while drinking a beer, smoking a cigarette and playing Civ.  Suffice to say that in most of the competitions the Pro still outperformed the Joe, but on occasion the Joe outplayed and outlasted his competition.

What's all this leading up to?  In some ways the market is a contest between the pros and the plumbers.  But sometimes the Joes get the call right which brings me to this weeks sentiment survey.  Typically when fear ramps up among individual investors it is time to put on the contrarian hat and be prepared to act on the opposite side.  This weeks AAII Sentiment Survey shows a 13.6% increase in bearishness over the previous week which results in the highest reading since 10/06/11 of 42.1% while bullishness decreased 10% to 25.4.  In contrast the Investor Intelligence survey shows no decrease in bearishness over the previous week (20.4%) and also shows only a modest drop of 4% in bullishness from 43% to 38.7%.

What we have here is a very clear difference of opinion between the Pros and the Joes.  With this divergence and the belief that when the AAII survey gets bearish it's time to begin to get bullish, the edge here would appear to go to the Pros, but it's also good to remind ourselves that on occasion the Joe does make that trey.

As a side note it does beg the question, "With deteriorating breadth, bearish chart patterns, and macro woes in China and Europe why are the Pros so nonchalant?"