Buen resumen de indicadores a seguir durante las formaciones de techos y suelos en el mercado de acciones

Equities have continued to rise even though the financial problems of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) remain unresolved.

Bullish sentiment readings have reached extremes and investors have positioned themselves for a singular, bullish outcome.

While some market observers view high investor bullishness as an indicator that stocks will continue to advance, we believe lopsided sentiment is the Achilles' heel for markets.

In fact, all of the major declines in the past few years were preceded by extremes in bullish investor readings.

Figure 1 shows that bulls now outnumber bears by the second largest percentage in the past 4 years.

The last time the net percentage of bulls was as high as it is now was coincidentally just before the market topped in May 2011.

Stocks Are On The Cusp Of A Major Decline