Up until today, the S&P 500 has been somewhat wishy-washy on whether or not it was to stay above its 50-DMA. Despite that choppy price action in addition to a crazy few days of headlines ranging from the squashing then revival of hopes for a stimulus deal to the president’s contraction of and recovery from COVID, sentiment has seen a significant pick up this week.  The American Association of Individual Investors’ weekly reading on bullish sentiment rose 8.5 percentage points this week to 34.74%.  That is the highest level of bullish sentiment since the initial rally off the bear market lows on April 16th when bullish sentiment was only slightly higher at 34.86%.  That 8.5 percentage point increase was also the largest one week rise in bullish sentiment since January when it rose 8.76 percentage points.

Those gains to optimism took from the bearish camp as bearish sentiment fell to 38.97%.  Although the 4.1 percentage point decline was not particularly large—for example, less than a month ago we saw a larger 8.06 percentage point decline—bearish sentiment has fallen back below 40% for just the second time since mid-June; the other week below 40% being August 27th (39.62%).  Bearish sentiment is now at the lowest level since June 11th.

With bullish and bearish sentiment at new highs and lows, respectively, the bull-bear spread has reached its least negative level since June 11th.  At -4.23, the record streak of consecutive negative readings in the spread—meaning bearish sentiment outweighs bullish sentiment—is on the ropes, but still alive growing to 33 weeks long.

The gains in bullish sentiment also took from neutral sentiment as the percentage of investors reporting as such fell from 30.69% to 26.29%.  That is the lowest level for neutral sentiment since a reading of 23.79% back in mid-July. It was also the largest single week decline in the reading since that same week. Click here to view Bespoke’s premium membership options for our best research available.