Newsletter Optimism Rises to 3-Month High

Optimism about U.S. stocks among newsletter editors rose for the fifth straight week, climbing to its highest point in more than three months, according to the latest poll by Investors Intelligence.

The percentage of editors who considered themselves bullish, or optimistic, rose to 50.4% in the survey conducted Friday from 44.4% the previous week. Before rising in the last five weeks, optimism reached a one-year low of 39.2% on Oct. 8. Optimism hasn’t been this high since July 30.

“When you’re in an up-trend, bullishness is a confirmation that the current rally has some staying power to it,” said Ken Tower, a technical analyst at UST Securities in Princeton, N.J.

The percentage of editors who considered themselves bearish, or pessimistic, about U.S. stocks fell to 30.1% from 35.9% the prior week.

The bullish reading could be seen as, well, bearish. Technical analysts--who try to predict market moves based on price patterns and other statistical measures--track investor sentiment as a “contrary” indicator.

When bullishness reaches an extreme low and bearishness a high, it’s taken as a sign that a rally could be near because investors who view the market less favorably could be saving cash to invest later.