Sentiment as seen through the AAII survey of individual investors was split evenly between the bulls and bears this week. After a week of the S&P 500 largely meandering sideways—with the exception of the surge yesterday—bullish sentiment dropped to 31.76% from 37.66% the prior week.  While this drop is nothing substantial, bullish sentiment still sits firmly below the historical average of 38.5%.

Bearish sentiment is dead even with bullish sentiment at 31.76%.  That is slightly down from 32.32% last week.  Since peaking in the first week of 2019, bearish sentiment has stayed within a low to mid 30% range.  This week’s reading is at the lower end of that range for this year. Unlike bullish sentiment and in spite of the post-Christmas rally, this is actually still slightly above the historical average for bearish sentiment.

Meanwhile, neutral sentiment ticked up this week to the highest level since the first week of August of last year at 36.5%.  Given these readings, investors seem to be increasingly cautious of the current rally.  Although—as is the case following any Fed Day—we will have to wait until next week’s data to see the full impact of the Fed’s shift in tone and the subsequent market reaction to their meeting yesterday.  The more dovish stance could help to boost bullish sentiment once again.  It is also possible that neutral sentiment could drop back to more normal levels given increased clarity on the policy front.

This morning’s release of Initial Jobless Claims seems to have made an about-face from the impressively strong reading of 199K seen last week.  On a seasonally adjusted basis, claims for this week not only went back above 200K but skyrocketed all the way to 253K; their highest level since September 2017.  This week’s number also far surpasses the recent jumps seen in October and November of last year when they rose to around 230K.  This spike in claims brings an end to the streak of 68 weeks with the seasonally adjusted number coming in below 250K.  That was the longest streak since the 89-week streak that ended in January of 1970.  Granted, the indicator still has 47K of insurance in its streak of remaining under 300K.  That streak is now at 204 weeks long, so while this week’s data raises an eyebrow, it still maintains a healthy level.

Give the large spike in claims, the four-week moving average also rose with a 5K uptick this week to 220.25K.  That is right back in line to where the moving average was back in November and December.  With the large reading from this week staying in as an input to the average, it will likely remain somewhat elevated for the time being.

Turning to the non-seasonally adjusted (NSA) data, believe it or not, claims actually fell by almost 20K.  The NSA number for this week was 250.2K versus 269.8K last week.  Once again, that is well below the average for the current week since 2000 and the lowest reading for the current week in that same timeframe.  While the seasonally adjusted number may have come in exceptionally high, labor markets still seem healthy through this non-seasonally adjusted number. The large divergence between the SA and NSA data could very well come as a result of certain quirks in the SA calculations.  Also important to note, the government shutdown should not play too large of a role in these readings as government workers are supposed to apply for jobless benefits through other programs, meaning they would more than likely not be counted in these initial jobless claims numbers (although contractors impacted by the shutdown may have started to show in the numbers)