Sentiment Is Widely Positive

Jul. 13, 2018 12:30 AM ETSPY, QQQ, DIA, SH, IWM, TZA, SSO, TNA, VOO, SDS, IVV, SPXU, TQQQ, UPRO, PSQ, SPXL, UWM, RSP, SPXS, SQQQ, QID, DOG, QLD, DXD, UDOW, SDOW, VFINX, URTY, EPS, TWM, SCHX, VV, RWM, DDM, SRTY, VTWO, QQEW, QQQE, FEX, ILCB, SPLX, EEH, EQL, SFLA-OLD, QQXT, SPUU, IWL, FWDD, SYE, SMLL, SPXE, UDPIX, JHML, OTPIX, RYARX, SPXN, HUSV, RYRSX, SPDN, SPXT, SPXV2 Likes

Thursday's Sentiment Survey report from The American Association of Individual Investors (AAII) is further confirmation that sentiment results are widely positive. The AAII report shows bullish individual investor sentiment jumped 15.2 percentage points to 43.1% this week. Ten percentage points came from a decline in bearishness of 10.1 percentage points and a decline of 5.1 percentage points in the neutral category.

This improvement in sentiment coincides with other sentiment measures showing high levels of optimism as well. Wednesday we noted the near record high in the NFIB Small Business Optimism Index. The consumer is optimistic as well with the University of Michigan Sentiment Index at a level that exceeds pre-financial crisis readings.

Sentiment measures tend to be contrarian ones, especially the AAII Sentiment Survey. From a positive standpoint, bullish sentiment is not at an extreme high, that is, at a level in excess of 50. In and of themselves, these positive sentiment readings can serve as a tailwind for further positive activity both economically and for the equity markets.

This article was written by

HORAN Capital Advisors is an SEC registered investment advisor that manages investment portfolios for individuals and institutions. Our firm utilizes a disciplined investing approach that should create wealth for our clients over time. Our investment bias is to invest in companies that generate a steady return over time, i.e., singles and doubles. This singles and doubles approach tends to lead to investments in higher quality dividend growth/cash flow growth companies. On the other hand, there are times when a company's stock price seems to be trading below its fair valuation. Short term gains are possible in these situations. I have been managing investment portfolios for individuals and institutions for over fifteen years and believe investing is like running a marathon and not a sprint. Taking the road less traveled, more often than not, leads to higher returns. Visit: The Blog of HORAN Capital Advisors at (https://horanassoc.com/insights/market-commentary-blog)
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