In spite of the fact that newsletter writers are less bearish than at any time since at least 1989, individual investors have reined in their horns this week. According to the weekly survey from the American Association of Individual Investors, bullish sentiment dropped this week from 45.48% down to 39.2%. That drop of 6.3 percentage points is the largest weekly decline since late September.
With bullish sentiment dropping, bearish sentiment increased. As shown in the lower chart, bearish sentiment increased from 21.8% up to 27.5%. This increase of 5.7 percentage points represents a five-week high. Even at current levels, though, bearish sentiment is still well below its 34% average during the bull market.