That's a lot of capital that could propel the market even higher if those people turn bullish. When the crowd becomes overwhelmingly bullish, stocks shoot into blowoff moves, tempting pros to sell. Meanwhile, the rush into equities depletes money available for investment. With no more dollars to chase stocks, equity prices fall. The opposite holds true when sentiment turns excessively bearish.
People throw away their stocks, which creates the smell of opportunity for bargain hunters.
More and more money builds up on the sidelines. A positive shift in perceptions will cut loose a gusher of cash back into the market. By using these indicators to keep track of the herd mentality, you can avoid getting trampled. The Investors Intelligence weekly sentiment survey is graphically displayed on the General Market page each day. The survey, released every Wednesday, asks investment advisers their opinion about the market's prospects.