What rally?  That’s what individual investors are saying this week as bullish sentiment dropped to not only its lowest level of the current bull market but also its lowest level in more than a decade.  According to the American Association of Individual Investors (AAII), bullish sentiment declined from 19.34% down to 17.75% this week.  That took out the prior bull market low of 17.9% from January.

Although bullish sentiment declined, bearish sentiment actually declined as well and by a larger amount than bullish sentiment.  As shown in the chart below, bearish sentiment fell from 34.1% down to 29.39%.

The real standout of this week’s sentiment survey was neutral sentiment.  In this week’s survey, neutrals spiked 6.3 percentage points from 46.56% up to 52.86%.  That’s an extraordinarily large number and signifies that investors are increasingly apathetic towards the market with little conviction in either direction.  What is the most interesting about this trend is that in each of the three times that the S&P 500 has approached 2,100 in the last year or so, neutral sentiment spikes.  In other words, as prices climb investors are doubting whether stocks can make another leg higher.  Will the third time be the charm?

Crude Sees New Highs:  After seeing their highest levels in more than 80 years, oil stockpiles have fallen recently and coupled with declining US production, have helped to push prices to new 2016 highs.  The Energy Department reported declines in US crude inventories and production on Wednesday, and prices increased to over $50 a barrel.   The recent surge in prices of over 85% since the lows in February can be attributed to declines in supply in the US and globally as companies have cut spending on new exploration and production.  Also, output has seen declines due to unexpected production outages from attacks in Nigeria to power cuts in Venezuela, and wildfires in Canada.

Survey Says:  Building upon yesterday’s article on housing and consumer spending, our most recent Consumer Pulse survey report has indicated that consumers are highly in-tuned to changes in gas prices.  In fact, our tracker even shows that consumers noticed the lows in February and have followed the recent price increases through April.

Despite the recent spike in gas prices, our survey has seen a sharp drop MoM in the number of Americans reporting that they live “paycheck to paycheck.”  In our view, this shift was a key driver of improved consumer sentiment and activity improvement across all categories in our most recent Consumer Pulse report.  This shift is also interesting because it goes against the conventional thinking that when gas prices increase, consumers tend to spend less.  However, as we noted in yesterday’s article, consumers are the most satisfied with their personal finances relative to a year ago in our survey’s history.  So even though gas prices are increasing just in time for the summer (they typically do), consumers are still confident about what is in their bank accounts.

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Bespoke’s Paul Hickey appeared on Bloomberg’s Go earlier today to discuss the overall market and the impact of politics on financial markets. To view the clips, please click on the image or links below.

Bloomberg Go: Democrat Policies Favor Middle-Income Consumers

Bloomberg Go: Late Stage Economy Doesn’t Mean Weak Markets

Jobless claims for the last week continued to decline from the mini-spike we saw in the prior few weeks.  While economists were expecting first-time claims to come in at a level of 275K, the actual reading came in at 268K.  That’s the lowest reading in four weeks and represents a decline of 26K from the short-term high of 294K two weeks ago.  It has also now been 64 straight weeks since claims last eclipsed 300K on a weekly basis.

Even with the declines of the last two weeks, because it was dropping such low numbers in the prior two weeks, the four-week moving average increased once again this week for the fourth straight weekly gain.  At a level of 275.5K, the moving average is now 22.5K above its multi-decade low of 256K from 4/22.  While that level is unlikely to be broken to the downside anytime soon, given we will be dropping some relatively large readings in the next couple of weeks, it should decline nonetheless.

On a non-seasonally adjusted (NSA) basis, jobless claims edged lower by 4K down to 240.9K.  For the current week of the year, this is the lowest level since 2000 and 85K below the average of the current week for every year since 2000.