The Bull / Bear ratio is an indicator, which measures the general market sentiment, published weekly by Investor’s Intelligence. Comparing the number of bulls, compared to the number of bearish investors (Bears). The survey is conducted through surveys asking the principal investors and editors if their outlook is bullish, bearish or neutral.
If the Bull / Bear ratio is> 3, there will be more than 3 bulls per bearer, so the sentiment is extremely bullish, in that situation the stock market is likely to be at a high.
If the Bull / Bear ratio is < 1 , there will be less than 1 bullish for each bearer, which leads to heavy pessimism, and the stock market is likely to be at a low.
Bear ratio comparison
What is the relationship between crises and Bull / Bear ratio?
There are numerous opinions about the relationship between the market sentiment as measured by the Bull Bear ratio and the evolution of the stock market . Despite all fundamental analysis, probabilities, and technical analysis. Who buy shares are human beings, and often we get carried away by impulses, either by a feeling of panic, leading to a recession, or euphoria which creates the familiar bubbles, But can we predict? , Let’s see if the Bull Bear ratio helps.
With Bull Bear data since 1987, we find the stock market crash of 1987 (black Monday), the .com bubble of the year 2000 and the financial crisis of year 2007. First, we will analyze the moments before the crisis or ceilings and later the exit or floors.
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The moments before the crisis are usually accompanied by collective euphoria, however from what we can see in the graphs, the bull bear would only have predicted the crisis of 1987. In 2000 and 2007, we did not find the ratio by Above 3 consistently.
The floors of the crisis if they are predicted mostly by the Bull Bear ratio. We can observe how in the years after the ratio fell from 1, there were consistent rises in the index. Therefore, the ratio is going to be an important data when determining the entry points in the market.