The S&P 500 is currently at record highs, but recent sentiment readings are still relatively bearish. However, this isn’t necessarily negative for markets, as it gives the opportunity for bears to shift their position, which would likely be accompanied by an increase in equity purchases. AAII‘s reading on bullish sentiment moved from 25.2% last week to 29.6% this week. This week’s reading is still 6.7 percentage points below the average since 2009.

In turn, bearish sentiment dropped from 39.3% down to 33.9%, which is only 1.8 percentage points higher than the historical average level. This week’s reading was also the second-largest week-over-week decline in bearish sentiment since September 9th.

Neutral sentiment ticked higher by 1.2 percentage points, resulting in 36.6% of respondents reporting a neutral view of the market. This is the lowest absolute change in a month and is 5.0 percentage points higher than the average level.

The NAAIM Exposure Index moved higher this week alongside bullish sentiment. The index ranges from +200 (levered long) to -200 (levered short) and this week the index moved from 52.2 to 67.0, essentially erasing last week’s significant drop. That indicates reporting investment managers’ exposure to US equities is roughly 67%. Click here to view Bespoke’s premium membership options.

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