Neutral Sentiment Hits Multi-Year High

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Includes: DDM, DIA, DOG, DXD, EEH, EPS, EQL, FEX, FWDD, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWM, RYARX, RYRSX, SCAP, SCHX, SDOW, SDS, SFLA, SH, SMLL, SPDN, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, UWM, VFINX, VOO, VTWO, VV
by: Bespoke Investment Group
Summary

Since the Q4 2018 sell-off, bullish sentiment as seen through AAII's weekly survey has remained relatively stable off of its lows established in December.

Only 20.17% of investors responded as bearish this week.

While bearish sentiment is right around lows again, neutral sentiment has continued to surge.

Since the Q4 2018 sell-off, bullish sentiment as seen through AAII's weekly survey has remained relatively stable off of its lows established in December. For most of the year, it has remained in the 30s briefly pushing above 40% a couple of times. This week it came in on the lower end of this range with 33.52% of investors reporting bullish sentiment, down from 37.56% last week. While this is at the lower end of the recent range, it by no means is at any sort of extreme on a longer-term perspective. This is a bit of a divergence from sentiment seen through the Investor Intelligence survey, which recently saw bullish sentiment reach its highest levels since mid-October. Bearish sentiment readings in the same survey are at their lowest since the same time last year and more closely resembling the AAII survey.

Expanding further on bearish sentiment, it remains very low as the market reached a new all-time high in the past week. Only 20.17% of investors responded as bearish this week. That is the second lowest reading of the year; the one lower occurrence being back in late February when it read 20%. Somewhat similar to bullish sentiment, this is well below the historic average for bearish sentiment (30.31%). But unlike bullish sentiment, the percentage of bears is currently sitting at a bit of an extreme; just over one standard deviation below that historic average.

While bearish sentiment is right around lows again, neutral sentiment has continued to surge. 46.31% of investors are reporting to have a neutral sentiment towards the stock market; the highest level since May of 2016. This is the second week in a row that neutral sentiment also came in over one standard deviation above the long-term average. Since the beginning of the survey in 1987, this is only the 13th time that neutral sentiment came in high by historical standards as bearish has simultaneously come in low by historical standards.

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.