The Investors Intelligence Sentiment Survey (IIS) was launched in January 1963 by A.W. Cohen. The Bull/Bear Ratio summarizes the content of the IIS survey each week. The Bull/Bear Ratio is based on a weekly poll of investment advisors as to whether they are bullish, bearish, or neutral on the stock market. The Ratio shows the relationship between the bullish and bearish advisors. It is interpreted as a contrary indicator, meaning that if it reflects extreme bullishness, the market is probably at a top and vice versa. High readings of the Bull/Bear Ratio are bearish and low readings are bullish.
In his book Winning On Wall Street, Dr. Martin Zweig describes sentiment indicators as follows; “Beware of the crowd when the crowd is too one-sided.” Extreme optimism on the part of the public and professionals often coincides with market tops, and extreme pessimism often coincides with market bottoms.