Market Takes Its Toll On Bullish Sentiment

Includes: DIA, QQQ, SPY
by: Bespoke Investment Group

It seems that all of the weakness and volatility in equities so far this year is finally taking its toll on the sentiment of individual investors. According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 46.11% down to 37.1%. That 9 percentage point drop took bullish sentiment down to its lowest level since 10/2 and back below the bull market average of 38.8%.

While bulls are starting to scatter, the bears are slowly coming out of their caves. In this week's survey, bearish sentiment rose by 9.6 percentage points to 30.8% from 21.25%. This was the highest reading since last October's equity market lows, and was the largest one week increase since January 2014. From a contrarian perspective, it is nice to see a little nervousness on the part of investors instead of complacency.