The recent weakness in equity market prices has continued to take its toll on investor sentiment in the latest week. According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 39.8% down to 31.6%, which is the lowest level since 8/7/14. With this week’s decline, bullish sentiment has now dropped for three straight weeks, for a total decline of 15.42 percentage points. To put this in perspective, the last time we saw a larger three week decline in bullish sentiment was more than a year ago in January 2014, and there have only been eight other occurrences in this bull market where we saw a larger three week decline.
Perhaps the most interesting part of the pullback in bullish sentiment, though, is where the bulls didn’t go. With such a large decline in bullish sentiment, one would have expected a similar increase in bearish sentiment. However, over the three weeks that bullish sentiment has dropped more than 15 percentage points, bearish sentiment has increased by just under half as much (7.52 percentage points). The rest of the bulls have merely moved in to the neutral camp, which now stands at 43%.