Sentiment Streak Over

Feb 2, 2023

Given the collection periods ending last night at midnight at the absolute latest, the latest sentiment surveys would have hardly captured shifts in outlook following the latest FOMC decision or the strong market reaction to the FOMC.  That is to say, the latest AAII sentiment survey can be considered a bit stale. Regardless, the latest week’s survey from AAII showed a modest increase in the percentage of respondents reporting as bullish.  While still below the high of 31% from two weeks ago, 29.9% of investors reported as bullish this week.

It is a similar picture for bearish sentiment.  34.6% reported as bearish in the latest week which remains at the low end of the past year’s range of readings but slightly above the more recent low from two weeks ago.

Without any major shifts in bullish or bearish sentiment, bears continue to outnumber bulls as has been the case for a record 44 weeks in a row.  That being said, the bull-bear spread has been showing single-digit readings for three weeks in a row.  The only other time during the streak of negative readings that the same could be said was last August.

While the record streak of overall bearish sentiment readings lives on for the AAII survey, combining the AAII survey with other sentiment readings like the NAAIM Exposure Index and the Investors Intelligence survey shows sentiment is finally back to bullish, if even just barely. As shown in the first chart below, the average sentiment survey is now very slightly above historical average readings.  That is the first time this has occurred in over a year, bringing to an end a record streak of negative readings. Click here to learn more about Bespoke’s premium stock market research service.

Layoffs Still Not Showing

Feb 2, 2023

Jobless claims continue to impress with the latest reading on seasonally adjusted initial claims dropping to 183K which is the lowest level since April 2022.  Claims have now declined in four of the last five weeks and have shown sub-200K prints in each of the past three weeks.

On a non-seasonally adjusted (NSA) basis, claims are falling sharply as would be seasonally normal at this point of the year.  In fact, this week and last are two of the weeks of the year that have most consistently seen a lower sequential reading in claims on a historical basis.  As shown in the second chart below, last week has never seen claims move higher week over week while the current week of the year has only seen an increase 9% of the time.  While NSA claims were lower this week, it was not by much with the reading falling from 225.23K to just 224.36K.  The only other time claims have fallen by less than 1K during the comparable week of the year was in 2006. Although the most recent week’s data was not as strong as might be expected given seasonality and that very well could be a result of recent layoffs, claims remain at historically strong levels.

As for continuing claims, which are lagged an additional week to the initial claims number, the latest reading came in at 1.655 million versus expectations for an increase to 1.684 million.  Unlike initial claims, continuing claims are much further above last year’s lows, however, the past several weeks have marked a pause in what had been a steep uptrend that had developed in the back half of last year. Additionally, as for the actual level of claims, the most recent readings remain impressively strong and consistent with pre-pandemic levels that had not been seen in around 50 years. Click here to learn more about Bespoke’s premium stock market research service.