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While sentiment on the part of individual investors definitely has seen an uptick since the election, in the last two weeks the positive momentum has stalled. In this week’s sentiment survey from AAII, individual investor bullish sentiment saw a very slight decline, falling from 43.78% down to 43.12%. While the move was extremely small, optimism is still down over six percentage points from where it was two weeks ago even as equities have been rallying to record highs. While you may say that it’s perfectly natural for investors to become less positive as stocks become more expensive, that would mean that they would have had to become positive in the first place, and that has not been the case. In fact, the last time more than half of individual investors were bullish was 101 weeks ago at the start of 2015.
Looking at pessimism, we have now seen two straight weekly increases in bearish sentiment from 22.08% up to 26.49%. This is still low relative to recent history, and as shown in the chart below, the level of bearish investors remains below the uptrend that was broken to the downside three weeks ago.