Bulls and Bears Swing Double Digits

Mar 24, 2022

There’s nothing like higher prices to cure investor blues, and the last week has been a perfect example of that.  AAII’s weekly sentiment survey saw a double-digit increase in the percentage of respondents reporting as bullish this week with that reading rising from 22.5% up to 32.8% and matching the highest level of optimism in 2022.

Those gains to bullish sentiment borrowed entirely from bears as the percentage of respondents reporting as pessimistic fell from nearly 50% of respondents down to 35.4%. The 14.4 percentage point decline marked the largest weekly decline in bearish sentiment since July 2010 when the reading had fallen by 19.27 percentage points. More recently, however, there have been a couple of other double-digit drops in bearish sentiment including a 12.3 percentage point decline in the first week of March and an 11.9 percentage point drop in December.

Bears continue to outnumber bulls, but the margin has narrowed to the smallest degree since the first week of the year. The bull-bear spread has risen to -2.6 after leaping higher by 24.7 points week over week; the largest one-week increase in the number since October 2019.

Looking at it another way,  this week marked the first time since October 2019 that bullish sentiment rose by at least 10 percentage points while bearish sentiment fell by at least 10 percentage points in the same week. In the table below, we show each prior instance of simultaneous double-digit swings in bullish and bearish sentiment without another occurrence in the previous six months.  As for how price action has responded to such swings in sentiment, the S&P 500 has generally seen consistently positive performance in the months ahead, but only one week and one-month performance has been significantly stronger on an average or median basis than what has been the norm. Click here to view Bespoke’s premium membership options.

Jobless Claims at Lowest Level in Over 50 Years

Mar 24, 2022

Since early December, initial jobless claims have risen and remained above multi-decade lows. That is until this week.  Seasonally adjusted claims fell for a second week in a row down to 187K this week.  That is the lowest reading since claims came in at 182K all the way back in September 1969.

While not to take away from the historically strong reading as NSA claims also hit a new low for the pandemic of 181.1K, before seasonal adjustment, jobless claims have not exactly fallen to as significant of a low as the adjusted number. Although that is the lowest level for the current week of the year since 1969, there have been recent periods like the fall of 2018 and 2019 in which claims were even lower. Declines in initial claims have historically been common for the current week of the year, but the next couple of weeks have typically seen claims experience a brief bump before resuming a seasonal downtrend roughly through mid-spring.

Continuing claims have fallen even more consistently with week-over-week improvements in 7 of the past 10 weeks. Now at 1.35 million, continuing claims are down to the lowest level since the first week of 1970.  Click here to view Bespoke’s premium membership options.