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Running Of The Bulls (From Stocks)

It really didn't take much for the individual investor to sour on equities. After nearly three years where bulls failed to gain a majority in the weekly sentiment survey from AAII, in late December of last year, bullish sentiment finally topped 50% and reached as high 59.75% in early January. Then, the correction came. After the swoon in equities in late January/early February, sentiment remained surprisingly resilient at just under 50% in mid-February. As the initial bounce off the February lows lost momentum and volatility continued, individual investors have had enough and are quickly jumping off the bullish bandwagon.

In this week's sentiment survey from AAII, bullish sentiment plummeted nearly 11 percentage points falling from 37.28% down to 26.4%. That's the lowest weekly reading since the end of August and the largest two-week decline since June 2013. That's nearly five years ago!

While investors have been exiting the bullish camp, bearish sentiment hasn't seen much of a bounce. At 28.38%, it is slightly higher than bullish sentiment, but it has been higher as recently as early February.

Neutral is where it's at these days. In this week's survey, the non-committal camp increased from 39.3% up to 45.2%. That's the highest weekly reading since May 2016 and the largest two-week increase since December 2015.

This article was written by

Bespoke Investment Group provides some of the most original content and intuitive thinking on the Street. Founded by Paul Hickey and Justin Walters, formerly of Birinyi Associates and creators of the acclaimed TickerSense blog, Bespoke offers multiple products that allow anyone, from institutions to the most modest investor, to gain the data and knowledge necessary to make intelligent and profitable investment decisions. Along with running their Think B.I.G. finance blog, Bespoke provides timely investment ideas through its Bespoke Premium (http://bespokepremium.com/) subscription service and also manages money (http://bespokepremium.com/mm) for high net worth individuals. Visit: Bespoke Investment Group (http://bespokeinvest.com/)

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Comments (7)

Loss of investor confidence in equities serves as a buy signal for contrarians....
Totally agree
Thanks for important data.
I am BULLISH on the market. I make my most money when negative bias rises. The more negative the bias the more I invest. It has worked for me for a very long time. At present, I am loaded up on select high yield REITs and BDCs and primarily monthly pay. I collect high dividends in the interim.

I am not a financial advisor so do your own DD. Good investing to you.
What’s the recommend CUSIP for buying 10 year and 20 year bonds
Thank you for the data.
R Naylor profile picture
Thank you, interesting work as always. This explains why the mega caps represented by QQQ are seriously outperforming YTD.
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