Tariff headlines have taken a front seat in the past couple of weeks leading stocks to see their worst declines of the year.  Not surprisingly, sentiment has begun to reflect price action.  One week after coming in at its highest level since October (around the time the S&P 500 hit its previous all-time high), bullish sentiment has fallen off of a cliff this week to 29.82% versus 43.12% last week.  From a historical perspective, this is not at any kind of extreme, but it did bring optimism to its lowest level of 2019 and by a pretty wide margin at that. Additionally, this was the largest drop in bullish sentiment since December 13th of last year when it fell 17.04% in a week. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Bears have overtaken the bulls this week as the bull-bear spread is now negative for the first time since January 17th.  Bearish sentiment spiked up to 39.3% from 23.19% last week.  While this was a massive spike higher, it is still well off of any sort of extreme and we actually saw higher readings late last year.  Investors Intelligence is echoing the AAII results as that survey showed the highest percentage of respondents since February (31.1%) expecting a correction. Granted, bearish sentiment in this survey remains muted as it actually fell to its lowest level since April of last year.

Tanking to 30.88%, it is hard to still say neutral sentiment is still elevated after peaking four weeks ago when it hit 46.31%.  This represents the sharpest four-week declines in neutral sentiment 1/23/16 when it fell 15.71 percentage points (from 51.31% to 29.77%). Currently, neutral sentiment is sitting less than a percentage point below its historical average.