Following on the heels of the big drop in Consumer Confidence earlier in the week, the latest survey of investor sentiment from the American Association of Individual Investors (AAII) also showed a large drop in bullish sentiment. After climbing up to 32.5% last week, bullish sentiment dropped by over eleven percentage points to 21.1%. This represents the lowest level since early June and the 18th straight week that it has been below the average reading of 38.19% since 2009.
This week’s move in bearish sentiment was even larger, as pessimism spiked up to 40.7%. That’s the highest level of bearish sentiment in nearly two years (August 2013). As a result of this week’s moves, the spread between bullish and bearish sentiment now stands at -19.59 percentage points, which is the most negative spread since April 2013!
While bullish and bearish sentiment readings moved to extreme levels, neutral sentiment actually dropped below 40% for the first time since April. This ended a record 16 straight weeks where neutral sentiment was above 40%. Last week, we mentioned the fact that investors were becoming a little more decisive in their feelings toward the market, and that seemed to continue this week.