The S&P 500 is hovering right near record highs but recent sentiment readings would have you thinking otherwise.  The AAII‘s reading on bullish sentiment fell from 29.7% last week to 25.2% this week.  That is the lowest reading on bullish sentiment since the week of September 16th when it was at 22.4%.

Bearish sentiment, in turn, rose 8.8 percentage points to 39.3%.  While that was the largest one-week uptick in bearish sentiment since mid-September, the actual level of bearish sentiment was even higher only two weeks ago.

Neutral sentiment fell by a similar amount to bullish sentiment this week.  After hitting one of the highest levels of the past couple of years last week, neutral sentiment moderated to 35.4% this week.

While the AAII survey showed overall bearish tones this week, the NAAIM Exposure Index has taken an even more pessimistic turn.  This index ranges from +200 (leveraged long) to -200 (leveraged short) and this week the index fell to 52.2.  That indicates reporting investment managers’ exposure to US equities is roughly 50%.  That is the lowest reading since this past spring and prior to that, the spring of 2020 was the last time with as low of a reading.

Given the rise of bearish sentiment across indicators this week, our sentiment composite has now fallen to the lowest level since May 2020.  This composite averages across the current readings (normalized by standard deviations from the historical average) for the bull-bear spreads of the AAII and Investors Intelligence surveys and the NAAIM index. Click here to view Bespoke’s premium membership options.

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