NEW YORK (
) -- The stock market is
since the start of earnings season but retail investors aren't buying it.
for the week ended Wednesday found just 22.2% of respondents identifying themselves as bullish about where the
is heading over the next six months.
That's a decline of 8 percentage points from last week, well below the historical average of 39% and the lowest bullish reading since August 2010. The AAII has roughly 150,000 members but doesn't disclose how many participate in the survey each week.
Thirty-six percent of those polled said they were neutral, up a percentage point from last week, while 41.8% identified themselves as bearish, a jump of 7.1 percentage points.
The good news though is that stocks tend to do quite well when the little guy gets really bearish.
Mark Arbeter, chief technical strategist at
S&P Capital IQ
, pegged the AAII results as one of the positives emerging for U.S. equities right now in a Thursday follow-up to his
late last week.
"Considering that the '500' just went through a 10% haircut, we would not have anticipated such a low sentiment reading," he wrote. "Like strategists, analysts, and investment gurus, individuals are watching too much TV, reading too many bearish headlines, and not paying attention to the charts, in our opinion."
As previously stated, Arbeter thinks the S&P 500 has some room to run at current levels with the next area of resistance in the 1400-1422 range. On Thursday, he said the charts are look set up for a strong end to the year with a break above the post-financial crisis high of 1422 in April opening the door for the index to wrap up 2012 in the high 1400-low 1500 area.
"We think the stock market may be emerging from the typical choppy bottoming formation and into a very fluid move higher," he said. "This potential 'sweet spot' of many 5-wave advances usually sees many weeks of consistently higher prices, where pullbacks are bought, and investors with cash are left sitting on the sidelines waiting for decent-sized pullbacks that never materialize. We saw these fluid moves in the 2010/2011 rally as well as in 2012. We believe it also forces bearish institutional investors to allocate capital toward stocks and bearish strategists to upgrade their opinions, fueling further gains in stocks."
Among the other positive signs that Arbeter points out are the NYSE advance/decline line recently hitting an all-time high, a number of Wall Street strategists recommending a low asset allocation to equities and breakouts in some mega-cap stocks from decades-long bases to new all-time highs.
Arbeter also notes the action in the S&P 500's counterparts measuring the performance of small- and mid-caps is shaping up well, as is the path traced by the Dow Jones Transportation index.
"While we ponder potential new all-time highs for the S&P 500 in 2013, there are a few other key indices that are looking bullish longer-term and aren't too far from posting all-time highs, by our analysis," he wrote. "The S&P SmallCap 600 is only 4.5% below its all-time high posted in March while the S&P MidCap 400 is about 6% under its April 2011 all-time high. And despite all its recent price volatility, the DJ Transportation average is only about 7% beneath its July 2011 all-time peak. Despite recent all-time highs in these indices, they have basically traded sideways since their peaks in 2007 and may soon form very large cup-and-handle formations, which would measure to much higher price levels over the next couple of years."
As for tomorrow's scheduled news,
is the big earnings report Friday morning. The average estimate of analysts polled by
is for a profit of 37 cents a share in the June-ended period on revenue of $36.79 billion.
The stock is up 10% so far in 2012, outperforming the Dow, but it's pulled back a bit since hitting a 52-week high of $21 on March 28. GE has topped Wall Street's consensus view in seven of the past eight quarters, beating the estimate by an average of 8.6% in those instances.
2012 has seen the return of GE Capital
to the parent company and while GE's forward annual dividend yield sits comfortably above 3%, investors are always looking for more.
Back in April when GE reported its first-quarter results, CEO Jeff Immelt said the company was "positioned" for double-digit growth in 2012 and that it expects to return excess cash from GE Capital to shareholders this year, subject to approval by the Federal Reserve.
The sell side is very bullish ahead of the report with 13 of the 16 analysts covering GE at either strong buy (4) or buy (9) and the 12-month median price target at $22, implying potential upside of 11% from Thursday's close at $19.80.
Barclays previewed GE's numbers earlier this week, saying it expects the trend in margins to be a driver for the stock along with commentary around order rates and pricing. The firm has an overweight rating and $22 price target on the stock.
"Core growth in late/long cycle industrial businesses should continue to be strong as the energy cycle kicks into gear and wind sales accelerate before the production tax credit (PTC) expires at end of year," Barclays wrote. "The key focus, however, will be on orders, pricing in the backlog and profitability, where visibility remains lower. Last quarter, expectations were clearly set low, as 10% incremental margins in Industrial and news of pricing stability in energy orders were enough to drive stock outperformance."
The firm continued: "We are looking at incremental margins again in the 10% range, not great, but should improve from here. Order growth rates face tougher comps, which is a concern, although much of this is due to acquisitions completed last year in Energy and O&G
Oil & Gas."
Check out TheStreet's quote page for General Electric for year-to-date share performance, analyst ratings, earnings estimates and much more.
Also reporting on Friday are
American Electric Power
First Horizon National
First Niagara Financial
The economic calendar is empty on Friday.
And finally, the earnings headlines from tech heavyweights kept coming after Thursday's closing bell as both
topped Wall Street's profit expectations with their quarterly reports but came in light on revenue.
, or $10.12 a share, on revenue excluding traffic acquisition costs of $8.36 billion for the second quarter vs. the average analysts' estimate for a profit of $10.04 a share on revenue of $8.41 billion. The stock was last quoted at $611.44. up 3.1%, on after-hours volume of less than 1 million, according to
, or 73 cents a share, for its fiscal fourth quarter. Revenue totaled $18.06 billion. The consensus was for earnings of 62 cents a share on revenue of $18.13 billion. Microsoft shares added 2.5% to $31.42 in extended trades.
Other big movers late Thursday were
Chipotle Mexican Grill
Shares of flash memory specialist SanDisk were surging more than 11% after the company reported non-GAAP earnings of $51 million, or 21 cents a share, for the second quarter with revenue totaling $1.03 billion. The performance topped the average estimate of analysts polled by
for a profit of 18 cents a share on revenue of $1.02 billion.
Meanwhile, Chipotle's stock was moving in the opposite direction, losing 12% in extended action after the Denver-based restaurant operator's second-quarter profit topped Wall Street's view but the top line wasn't quite up to snuff. For the three months ended June 30, Chipotle earned $2.56 a share on revenue of $690.9 million vs. the consensus estimate for a profit of $2.30 a share on revenue of $707 million. The company backed expectations for comparable restaurant sales growth in the mid-single digits for the full year.
Chipotle's stock closed Thursday's regular session at $403.86, up 20% year-to-date, but the shares were plunging $47.35 to $356.51 after the close on volume of nearly 600,000. With a forward price-to-earnings multiple of 36.4X, Chipotle is especially vulnerable to pulling back on even the slightest disappointment.
Written by Michael Baron in New York.
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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.