Even though the S&P 500 is up around 3% from last week, all the volatility has helped to keep a lid on optimism.  This week’s AAII survey showed a second straight weekly increase in positive sentiment with 26.64% of investors reporting as bullish. Although it is off the lows of 21.6% from the first week in August, bullish sentiment remains more than one standard deviation below its historical average.

Bearish sentiment, on the other hand, has fallen more considerably from its more extreme reading at the beginning of the month. Down 8.5 percentage points from this recent high, bearish sentiment is now at 39.72%. With a decline of just over 5 percentage points from last week, bearish sentiment is still above its historical average of 30.35% but it is also in more of a normal range (unlike bullish sentiment, bearish sentiment is under one standard deviation from this average).

As investors exit the bearish camp, they are more or less cautiously optimistic.  As such, neutral sentiment has been on the rise over the past two weeks, and it is now at 33.64%.  That is slightly above its historical average. Even though it has been making its way higher, neutral sentiment is also still well below the range of the mid to upper 30’s that it was in for most of 2019. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

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