Bull/Bear Ratios Tank, So Stocks Move Higher

The S&P 500 is up 3.2% since last Thursday's close even though Fed Chair Jerome Powell's Jackson Hole speech on Friday was hawkish. Three sectors have outperformed the S&P 500, namely, Information Technology (4.7%), Consumer Discretionary (4.2%), and Communication Services (4.1%). These are the ones that are home to the MegaCap-8, which were boosted by the drop in the 10-year Treasury yield from 4.34% on August 21 to 4.11% today.

While stock prices didn't fall on Powell's speech, sentiment did turn more bearish, which is bullish from a contrarian perspective. The Investors Intelligence Bull/Bear Ratio fell to 2.07 this week from 3.07 four weeks ago (chart). The percentage of bulls fell from 57.1% to to 43.1% over this period. Many of those retreating bulls joined the correction camp rather than the bearish one.