With the S&P 500 on pace for back to back weekly rallies of more than 1% for the first time since February, bullish sentiment on the part of individual investors spiked to a six-month high this week. According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment jumped from 28.10 up to 37.52%. That represents the largest one-week increase since late June and the highest level of bullish sentiment since late March. Perhaps even more notable, though, is the fact that even after last week’s surge, bullish sentiment remains below its bull market average of 38% and has been under 40% for a record 32 straight weeks. It’s been quite awhile now since we have been able to say that the individual investor is bullish.
With the surge in bullish sentiment came an almost commensurate decline in bearish sentiment. As shown in the chart below, bearish sentiment saw its largest one-week decline since the end of July, falling from 39.9% down to 28.19%. That’s the lowest level of bearish sentiment since mid-July.