After a burst of exuberance following the election, the recent sideways action in markets is causing individual investors to rethink their bullish views. In the latest survey from AAII, bullish sentiment dropped from 43.64% down to 37.01%. Believe it or not, that 6.6 percentage point decline represents the largest weekly drop in bullish sentiment since March. As you are also probably aware, it has now been 107 weeks since bullish sentiment was 50% or above. Three more weeks below 50% and it will be tied for the longest sub-50% run in the history of the survey.
While bullish sentiment drifts back into its pre-election range, bearish sentiment has been on the rise. This week’s reading of 32.68% is the highest since the November election, and as shown in the chart below it also represents the first ‘higher high’ in bearish sentiment in quite some time.