Despite a one-day rebound on Tuesday, most of the past week has seen declines in the S&P 500. Although the drop isn’t particularly severe (currently the index is only down to the lowest levels since June 26th), sentiment has taken a sizable hit. The weekly sentiment survey from the American Association of Individual Investors, or AAII, fell sharply from one of the higher readings of the year to the lowest. As shown below, last week the percentage of survey respondents reporting they believed the S&P 500 would move higher in the next six months came in at 44.9%, tying the reading from three weeks prior for the most elevated level of bullishness since the week of April 23rd (46%). One week later, that dropped to 29.6%, which is the weakest investor sentiment reading since the second week of last September.

Although there have been some big swings in recent weeks, the actual level of bullish sentiment has been remarkably range-bound recently. For context, since the survey began in 1987, bullish sentiment has been between 30% and 50% about 65% of the time, with an average reading of 37.6% across all weeks. While readings between 30% and 50% are the most common, they have also been consistent over the past year. With this week’s fall back below 30%, a historic streak has ended.

As shown below, before this latest sub-30% reading, bullish sentiment came in between 30% and 50% for 44 consecutive weeks. That is by far the longest stretch on record and far surpassed the previous records of 30 straight weeks ending in 1995 and 1998.

Not only has bullish sentiment sat in a “normal” range for a historic stretch, but elevated bullish sentiment readings have been hard to come by lately.  Since the 2020s began, the highest bullish sentiment reading achieved was 56.9% in April 2021. Furthermore, bullish sentiment hasn’t registered a reading above 60% since 2010, whereas there were 44 weeks with readings above that level from 1990 through 2010. Conversely, the lowest it has fallen in the 2020s was readings around 15% in April 2022 and a more recent sub-20% reading in early spring 2025.  In other words, bullish sentiment has had more downside than upside this decade.

There is some necessary context to this pattern, though. From the start of the survey in 1987 through the mid-2000s, bullish sentiment was generally trending higher on a 5-year rolling basis.  However, since around 2005, that has changed to a secular downtrend. Shown a different way, using average readings across five-year periods, sentiment has been little changed over the past decade, and those readings are considerably lower than what was observed in the early 2000s and late1990s.

Pivoting back to the most recent week’s data, the 15.3 percentage point drop was large. It was the biggest one-week decline in bulls since a 16.5 percentage point decline in September 2021, and that also ranks in the 2nd percentile of all weekly moves since the start of the survey.

Again, as a testament to the stability of sentiment, below we show the rolling one-year average absolute weekly change in bullishness since the start of the survey. As with the actual level of bullishness, this line has generally trended lower over time, meaning week-to-week fluctuations are less volatile now than they were in years past. With that said, that downtrend has flattened out some in the past decade.

Looking more recently, there was a low of 3.75 percentage points achieved in early April, the lowest reading since November 2017 and a first percentile reading for the full survey history. In the three months since then, the reading has rebounded (meaning sentiment has gotten more volatile), but even at the current level of 4.63 percentage points, it remains in the bottom quartile of readings historically.

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The S&P 500 Utilities sector had its best day since April 30th yesterday, rallying 2.29%. All 31 constituents finished higher, giving the sector a perfect breadth day. The gain instantly took the sector from trading 0.21 standard deviations above its 50-DMA to the most overbought sector in the S&P 500, 1.49 standard deviations above its 50-DMA.

Over the last five years, the Utilities sector has recorded 24 days when it rallied 2%+ with perfect breadth. Most were concentrated in the first half of the chart below, while only four have occurred since the start of 2024. Yesterday’s 2.29% rally was also smaller than the average gain of 3.44% on these days since 1990. The largest came on 10/13/08, when the sector soared 13.52% for its biggest one-day gain since at least 1990.

As this has become an increasingly rare occurrence for Utilities, yesterday was just the sector’s third perfect breadth day this year. It’s the second most of any sector this year, yet still below Energy with 5 perfect breadth days. Energy (+31.9%) is currently the top-performing sector of 2026, while Utilities (+7.6%) is the seventh-best, in the bottom half.

Three perfect breadth days through July 22nd is historically low for Utilities. The sector also recorded three through the same point last year, but before that, no year had so few since 2005. The total reached 17 in 2020, while the average since 1990 is five through this point in the year.

Utilities also saw an unusually large expansion in the percentage of stocks above their 50-DMAs yesterday. That reading nearly doubled from 48.4% to 96.8%, an increase of 48.4 percentage points. Since 1990, only eight other days have produced an increase that large, all occurring since 2010. Moves of similar magnitude in the opposite direction have been nearly as rare, with only eleven days clocking a larger one-day decline.

As detailed in the table below, prior jumps of at least 48.4 percentage points in the share of Utilities stocks above their 50-DMAs haven’t provided much of an immediate tailwind. The sector averaged a decline of 0.2% over the next week and was higher only half the time three months later. Longer-term performance was more consistent, however, with the sector gaining an average of 3.4% over the next six months and 10.8% over the next year. The sector was also higher one year later following seven of the eight prior occurrences.

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The S&P 500 rallied 0.89% yesterday, but the gains were far less widespread than the move suggested. Net breadth (the # of individual stocks advancing minus declining) for the index came in at -41, and six of eleven sectors saw price move in the opposite direction of their underlying breadth. In other words, more than half of the market’s sectors finished with positive price action yesterday even though they had more decliners than advancers.

That degree of disagreement has been rare. Since 1990, there have only been 13 trading days when price and breadth diverged in at least six sectors, including yesterday. These occurrences have become noticeably more frequent, though, as six have come since November 2023 compared with just seven over the prior 33 years. No day has ever seen more than seven sectors diverge, and that has happened only twice, most recently on January 25th, 2011.

As shown below, these divergences have not historically been a bearish sign for the broader market. The S&P 500 was higher one month later 75% of the time, with an average gain of 1.26%, and three months later in 83.3% of cases, with an average gain of 4.49%. Six-month returns were positive following 10 of the 11 prior occurrences with enough time elapsed, while one-year returns were positive 80% of the time. The exception worth noting came on July 3, 2001, when price and breadth diverged in six sectors in the middle of the dot-com bear market. Over the following year, the September 11 attacks and the failures of Enron and WorldCom added to an already difficult backdrop, and the S&P 500 fell 22.72%.

With only a dozen prior examples, the record is too limited to treat yesterday’s divergence as a surefire signal. While returns have generally been positive, the one-year average gain of 9.84% and 80% positive rate are also broadly in line with the market’s long-term historical performance.

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