Bullish investor sentiment as measured by AAII’s sentiment survey rose 2.5 percentage points to 28.64% this week. While this is an improvement, bullish sentiment is still in the 18th percentile of the data over the past decade.  We must also note that the survey would not have captured any benefit from today’s news on the trade front and the technical breakout of stocks and other assets like crude oil. Save a tweet or a headline reversing what appears to be optimism given today’s positive price action, we’ll likely see a bigger jump in bullish sentiment next week.

Bulls borrowed from the bears this week as bearish sentiment fell from 42.2% last week to 39.5%.  As with bullish sentiment, this is not necessarily a dramatic improvement as it is still higher than 83% of weeks over the past 10 years.  Bearish sentiment also remains the predominant sentiment level among investors as the bull-bear spread is still fairly wide at -10.87 percentage points.  Granted, that is the narrowest spread since the last week of July when it was only 28 bps in favor of bears.

The bulk of the loss in bearish sentiment went to bulls, but a small portion also went to the neutral camp as the percentage of investors reporting as neutral grew to 31.9%.  While bullish sentiment is still several percentage points below its historical average and the opposite applying to bearish sentiment, neutral sentiment has been pulling back to its historical average over the past few months. Where it currently sits at 31.9%, it is only 0.33% from that average. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

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