The S&P 500 has made a quick recovery in the past week closing within a few basis points of a new 52-week high yesterday.  In spite of that improvement to price, sentiment has yet to fully buy-in.  The American Association of Individual Investors weekly sentiment survey only saw a modest improvement to the percentage of respondents reporting as bullish.  Just under 30% of respondents reported bullish sentiment versus a level of 26.7% last week.  That snapped a streak of back-to-back-to-back declines but still leaves bullish sentiment 4.1 points below where it was only two weeks ago.

While the change in bullish sentiment was nothing to write home about, bearish sentiment plummeted 11.9 percentage points to 30.5%.  That was the largest single-week decline since 10/17/19 when bearish sentiment collapsed an even larger 12.91 percentage points.  Back then, that brought bearish sentiment to a similar level of 31.05%.

In spite of bearish sentiment’s big reversal lower, the bull-bear spread remains negative, albeit not by much.

Considering bullish sentiment did not meet the big drop in bearish sentiment, neutral sentiment made up the difference rising 8.8 percentage points to 39.8%. That is the highest level of neutral sentiment since the first week of 2020 when it eclipsed 40%.

While the AAII numbers showed a big reversal in bearish sentiment, other sentiment indicators took more pessimistic tones this week. The NAAIM Exposure Index collapsed further to the lowest level since mid-October while the Investors Intelligence survey saw the biggest one-week drop in bullish sentiment since October 2019 to the weakest reading since early April 2020. Bearish sentiment, meanwhile, saw the largest one-week uptick since June 2012. As a result of the combined moves across these indicators, our sentiment composite has continued to plummet and is now in negative territory and at the weakest level since late September/early October. Click here to view Bespoke’s premium membership options.

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