Score Current Sentiment Readings
Enter this week's readings. Each indicator is scored against its long-run historical percentile thresholds. An indicator "fires" as a contrarian signal only when it crosses into extreme territory — meaningful elevation above average is not enough. Leave any field blank to exclude it.
Contrarian Signal Results
Indicator Breakdown
Conditions Checklist
Historical Reference: Threshold Benchmarks
The tracker scores each indicator against these long-run historical thresholds, derived from AAII, CBOE, and FINRA data since the mid-1980s. Exact percentile cutoffs shift modestly over time; these values represent widely cited approximate levels used by professional analysts.
| Indicator | Normal Range | Elevated Fear (>~75th pctile) | Extreme Fear (>~90th pctile) | Source |
|---|---|---|---|---|
| AAII Bearish % | 25–38% | >40% | >50% | aaii.com (weekly) |
| AAII Bull-Bear Spread | +5% to +12% | <-5% | <-20% | aaii.com (weekly) |
| CBOE Equity P/C (21d MA) | 0.55–0.80 | >0.85 | >0.95 | cboe.com (daily) |
| VIX | 12–20 | >25 | >35 | cboe.com (real-time) |
| Short Interest % Float (mkt avg) | 3.5–5% | >5.5% | >7% | FINRA (bi-monthly) |
| Days-to-Cover (individual) | 0.5–3 | >5 | >10 | FINRA / commercial |
| Investors Intelligence % Bulls | 50–60% | <40% | <35% | investorsintelligence.com (weekly) |
| Margin Debt YoY % Change | -5% to +10% | <-15% | <-30% | FINRA (monthly, ~6-week lag) |
Scoring Methodology
Each indicator is evaluated against two thresholds: "elevated fear" (approximately the 75th historical percentile of fearfulness) and "extreme fear" (approximately the 90th percentile). An indicator scores 0 points if it is within its normal range, 1 point if it is in the elevated-fear zone, and 2 points if it crosses into the extreme-fear zone.
The raw point total is converted to a 0–100 composite score normalized against the maximum possible score from the entered indicators. A composite of 70 or above means most available indicators are at or near historical extremes. A composite of 40–69 means the setup is strengthening but has not yet reached the level of universal indicator agreement that has historically produced the strongest contrarian returns. Below 40 means sentiment is elevated or mixed, but not at the extreme threshold levels that most reliably precede reversals.
The AAII bull-bear spread (bearish minus bullish) is computed automatically from the two AAII fields and scored as a separate derived indicator. This is why the tool asks for both bearish and bullish percentages rather than just one. The spread has historically been a more reliable contrarian signal than the bearish reading alone, because high spread values require simultaneously elevated bearish sentiment and depressed bullish sentiment.
Indicators that are left blank are excluded from the composite. The score is normalized to the indicators provided, so omitting indicators does not automatically lower the composite — but the reliability of the composite decreases as fewer indicators are included. Results from three or more indicators are meaningfully more reliable than results from one or two.
From Sentiment Signal to Actionable Setup
A high contrarian signal score means the sentiment environment is historically favorable for a market bottom or recovery — it does not mean a bottom has been confirmed. Sentiment can stay at extreme levels for weeks or months, and prices can continue falling while fear readings are already elevated. The failure to require price confirmation before entering has been one of the most common and costly mistakes among investors who follow sentiment indicators.
After identifying a high contrarian score (70+), the standard framework requires at least one of the following price confirmation signals before entering a position:
- Bullish reversal candle at a clear support level — hammer, dragonfly doji, or bullish engulfing on higher-than-average volume. The candle must form at support, not mid-range.
- Positive divergence on RSI or MACD relative to price. New price lows not confirmed by new momentum lows. Strongest when divergence spans at least two weeks of daily data.
- Failed breakdown — price breaks below a well-known support level, attracts short sellers, then reverses sharply above the breakdown level within one to three sessions. Failed breakdowns trigger short-covering that can accelerate the recovery.
- Breadth expansion — NYSE advance/decline line improving, more than 60% of S&P 500 components above their 20-day moving average, or a 90% up-volume day (NYSE advancing volume exceeds 90% of total volume). Breadth confirmation distinguishes broad-market recoveries from single-sector bounces.
Even with a confirmed setup, position sizing should reflect the inherent uncertainty. This is not a situation where a trader should deploy their full capital. Scale in over multiple entries, use defined stops below the support level where the signal formed, and define a target risk-reward ratio before entering — 2:1 minimum, 3:1 preferred for contrarian setups where timing is imprecise.
See the full framework at Combining Sentiment with Price Action.
Important Limitations
- This tool uses user-entered readings, not a live data feed. All indicator values must be looked up from primary sources and entered manually.
- Threshold benchmarks are long-run approximations. The exact percentile levels vary by time period; using data from 1987 vs 2000 vs 2010 as the base period produces somewhat different thresholds.
- The scoring methodology is a structured heuristic, not a quantitative backtest of a specific strategy. The composite score should be interpreted as a qualitative "strength of contrarian case" summary, not a precise probability estimate.
- Some indicators (short interest, margin debt) have significant reporting lags. In fast-moving market environments, the most recent available data may be two to six weeks old. Use these with appropriate skepticism during periods of rapid price change.
- This tool does not account for individual stock fundamentals, sector rotation, macro regime, or liquidity conditions — all of which affect whether a contrarian setup resolves in the expected direction.
- Past relationships between sentiment extremes and subsequent returns do not guarantee future results.
FAQ
What composite score threshold indicates a tradeable contrarian setup?
In the context of this tracker's 0–100 scale, a score of 70 or above indicates that most entered indicators are at or near extreme historical levels, consistent with the conditions that have historically preceded above-average six-month forward returns. A score of 50–69 is a setup that is developing but not yet at full extreme — worth monitoring and adding to a watchlist, but not yet sufficient for active positioning. Below 50, sentiment is elevated but not at the level of universal indicator agreement that produces the most reliable contrarian opportunities.
How does the bull-bear spread differ from the AAII bearish % alone?
The bull-bear spread is calculated as bearish percentage minus bullish percentage. It can reach extreme negative values even if the raw bearish percentage is not historically high, because it accounts for the simultaneous collapse in bullish sentiment. A reading of 45% bearish and 35% bullish (spread of +10) is actually a mild contrarian reading, while 38% bearish and 18% bullish (spread of +20) is more extreme despite the lower absolute bearish percentage. The spread is generally considered the better contrarian signal because it reflects the full distributional shift, not just one side of the distribution.
Can I use this tool for a specific stock rather than the broad market?
Partially. The AAII and Investors Intelligence surveys are market-level only. The put/call ratio entered should be the individual stock's equity options put/call ratio (available on options data platforms) rather than the CBOE market-wide figure. Short interest % of float and days-to-cover are directly applicable to individual stocks and are arguably the most useful inputs for single-stock contrarian setups. VIX can be kept as market context. A stock-specific contrarian analysis would typically weight put/call, short interest, and days-to-cover most heavily, and supplement with stock-specific signals like Form 4 insider buying and institutional ownership changes.
What does a high contrarian score mean in a fundamental bear market?
This is the most important nuance in contrarian investing. In a fundamental bear market driven by genuine earnings deterioration, rising credit risk, or macro stress, sentiment can reach extreme fear levels while prices continue falling for months — because each new fear reading reflects genuine underlying deterioration rather than emotional excess. Contrarian signals work best when the fear is disproportionate to fundamentals. Before acting on any high contrarian score, assess whether current valuations and earnings trends justify the price decline. If the market is pricing in accurate bad news, the contrarian case is much weaker than if prices have overshot on emotion.
Where do I find Investors Intelligence data?
Investors Intelligence publishes its Advisors Sentiment Report at investorsintelligence.com. The report is paid; the headline percentages are often quoted in free financial media (Barron's, MarketWatch, Bloomberg) each Wednesday after publication. The key number for this tracker is the % Bulls figure. The service has been running continuously since 1963, making it one of the longest continuous sentiment time series available.
How is margin debt a sentiment indicator?
Margin debt measures the total value of securities purchased on borrowed money through brokerage accounts. When investors are confident, they borrow aggressively to increase exposure, so margin debt rises. When fear spikes, investors deleverage — selling positions to reduce their loan balances — and margin debt falls sharply. A year-over-year decline in margin debt of 15% or more has historically coincided with major fear events and often with market bottoms. The data is published monthly by FINRA with approximately a six-week lag, so it is useful as a confirming rear-view indicator rather than a leading real-time signal.
Related Tools and Guides
- Sentiment Dashboard — multi-factor dashboard with VIX term structure and CNN Fear & Greed integration
- Combining Sentiment with Price Action — the full framework for translating sentiment readings into defined entries
- AAII and Investor Surveys as Contrarian Signals — deep guide on AAII methodology, historical averages, and how to interpret weekly readings
- Put/Call Ratio and Options Sentiment — equity vs total vs index ratios, reading spikes, VIX term structure
- Short Interest and Days-to-Cover — FINRA reporting schedules, squeeze mechanics, borrow rate as conviction signal