Investor sentiment these days is a bit of a puzzle.  When the market goes down, bullish sentiment retreats while bearish sentiment spikes.  However, when the market rises, bullish sentiment stays flat.  This week’s sentiment survey from AAII is a perfect example.  In the latest week, which includes the declines that began last Friday, bullish sentiment declined from 29.75% down to 27.94%.  This represents the 46th straight week and the 80th time in the last 81 weeks that bullish sentiment has been below 40%.

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While bullish sentiment saw a relatively modest decline, bearish sentiment spiked, rising from 28.48% up to 35.92%.  That seven percentage point increase was the largest since mid-June.  As we often see following stock market declines like we have seen in the last week, there is still a widespread fear among individual investors of being left holding the bag when the music stops like they were back in 2000 and 2007, so at the first hint of trouble, sentiment shifts rapidly.

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