Given that equities have essentially traded straight down since the FOMC meeting on 9/17, individual investors are becoming increasingly negative on the prospect for equities. According to the latest survey of investor sentiment from the American Association of Individual Investors (AAII), bearish sentiment rose from 28.7% last week to 39.9% this week. That 11.2 percentage point increase represents the largest one-week increase in bearish sentiment since the first week of July and is the highest reading of bearish sentiment since the end of July.
As bearish sentiment increased, bulls are becoming increasingly scarce. In the latest week, bullish sentiment declined from 32.1% down to 28.1%. This is the lowest reading since just before the August swoon. Bullish sentiment has now been below its bull market average for 27 straight weeks, and below 40% for a record 31 weeks! Does anyone even remember what it feels like to be bullish anymore?