Bearish Sentiment Remains

Mar 9, 2023

The S&P 500’s swings higher and then lower over the past week have left sentiment little changed.  For the American Association of Individual Investors’  (AAII) weekly survey, 24.8% of respondents reporting as bullish compared to  23.4% the previous week.  That is the second higher reading in a row but still well below the recent high of 37.5% from one month ago.

Along with a modest bounce in bullishness, bearish sentiment has taken a modest decline falling from a recent high of 44.8% last week down to 41.7% today. That is the first decline in a month, leaving it in the middle of its range since the start of last year.

Given the moves in bullish and bearish sentiment, the bull-bear spread remains skewed in favor of bears for the third week in a row.

Following a sharp eight percentage point decline last week, neutral sentiment has bounced rising to 33.4%.  Albeit higher, outside of last week, that reading would be the lowest since the end of 2022.

Although recent weeks have seen the AAII survey return to deeply bearish sentiment, other surveys are not nearly as pessimistic.  While the AAII survey’s bull-bear spread sits well over a standard deviation below its historical average, the NAAIM Exposure index continues to show only modestly long positioning among active managers. Currently, that reading is 0.2 standard deviations below the historical norm. Meanwhile, the weekly Investors Intelligence survey is actually showing respondents are reporting as more bullish than has been historically normal.  Click here to learn more about Bespoke’s premium stock market research service.

Seasonal Headwinds Dying Down for Claims

Mar 9, 2023

The S&P 500 is rallying this morning in the wake of today’s weekly jobless claims print which gave investors at least some hope that data is flying in the face of the Fed’s recent hawkishness.  Whereas expectations called for initial claims to remain below 200K for the eighth week in a row, claims jumped by 21K to 211K. That is the highest reading since the week of December 24th.

As we have noted in recent weeks, although the seasonally adjusted number has gone on an impressive streak of sub-200K prints, the unadjusted number never fell below that threshold. This week saw the reading rise to 237.5K, the highest since only the second week of the year.  As shown in the second chart below, the first few months of the year have historically seen claims fall with the current week standing out as one with consistently higher claims week over week. Although the direction of non-seasonally adjusted claims this week is not particularly unusual, the 35.4K increase was much larger than the historical median increase of 14k usually seen for the comparable week of the year.

All of that means that claims in general are following seasonal patterns as could be expected. In the charts below, we show the seasonal factors for initial and continuing claims. Essentially, those factors represent how elevated claims are above what has been normal historically (a reading of 100 would indicate a normal reading).  Looking ahead over the next several weeks, seasonal headwinds will persist but not to the same degree as the first couple months of this year.  As for continuing claims, the next several weeks will see seasonal factoring more consistently roll over even more sharply as we enter a period of the year with much less of a seasonal headwind.

Like initial claims, seasonally adjusted continuing claims came in above expectations this week rising back above 1.7 million. At current levels, claims matched the recent high from the week of December 17th which is back in the middle of the pre-pandemic range. Click here to learn more about Bespoke’s premium stock market research service.