Bulls Back Above 30%

Aug 4, 2022

While the rally has paused today, the S&P 500 has continued to press higher in the past week and is currently hovering near resistance at the late May/early June highs.  In response to those moves, investor sentiment has improved with the weekly survey from the AAII showing over 30% of respondents reporting as bullish. That is the highest reading since the first week of June when the S&P 500 was at similar levels to now.

Bearish sentiment is a similar story in hitting the lowest level since the first week of June as it has fallen back below 40%. The further 1.2 percentage point drop marks the fourth week in a row that bearish sentiment has fallen, and the full decline since the recent high of 59.3% on June 23rd now sits at over 20 percentage points.

In spite of those further improvements, there continues to be more bears than bulls as the spread remains in negative territory. As shown in the second chart below, the bull bear spread has now been negative for 18 weeks in a row.

In addition to the drop in bearish sentiment, neutral sentiment was also lower falling 1.6 percentage points down to 30.6%. That is the first time neutral sentiment matched bullish sentiment since May of last year. Click here to learn more about Bespoke’s premium stock market research service.

Initial Claims Back to the Highs

Aug 4, 2022

Initial jobless claims came in matching expectations at 260K this week, up from last week’s downward revision of 254K. That reading leaves claims 1K below the pandemic high set two weeks ago. Those levels are above the pre-pandemic range and consistent with where claims stood in the fall of 2017.

On a non-seasonally adjusted basis, claims have the benefit of seasonal tailwinds at this point of the year as the mid-summer peak works itself out.  Given this, unadjusted claims have dropped to 205.6K from the high of 258.9K two weeks ago.  Although that is a strong level of claims, it is above the readings from the comparable week of the year in 2018 and 2019.

Continuing claims are lagged an additional week to the initial claims number meaning the most recent reading is as of the week of July 22nd. Although initial claims had fallen that week, continuing claims moved back above 1.4 million for the first time since mid-April. Unlike initial claims, and as we will discuss further in tonight’s Closer, the deterioration in continuing claims has been relatively modest as current levels are not only well below levels from the two years pre-pandemic, but this week’s reading would still make for some of the best readings since 1970.    Click here to learn more about Bespoke’s premium stock market research service.