Sentiment Not Reflecting Declines

|
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

43.12% of survey respondents reported bullish sentiment up from 39.02% last week.

Bearish sentiment rose to 23.19% from 21.34% last week.

Bulls and bears came entirely from the neutral camp this week as the percentage of investors reporting neutral sentiment continues to collapse, falling to 33.7%.

Declines over the past week have been some of the sharpest of 2019, but in spite of this price action, investor sentiment - as measured by the AAII's weekly investor sentiment survey - has yet to blink. In fact, 43.12% of survey respondents reported bullish sentiment up from 39.02% last week. While still within its normal range by historic standards (within one standard deviation of the historical average of 38.23%), that is the highest degree of bullish sentiment since October 4th of last year, just before the market rolled over.

Again, counter to what might have been expected, investors have yet to broadly turn more negative on the market as bulls continue to outweigh bears with the bull-bear spread at its widest since late February. But that doesn't mean bearish sentiment did not pick up at all this week. In fact, it rose to 23.19% from 21.34% last week. This is still well below where it has been for the better portion of the past few years, currently sitting just over 7% below the historical average.

Bulls and bears came entirely from the neutral camp this week as the percentage of investors reporting neutral sentiment continues to collapse, falling to 33.7%. Only two weeks ago neutral sentiment came in at a multi-year high of 46.31%, far above what has historically been observed. That 12.61% drop is the largest two-week decline in neutral sentiment since April 2004 when it fell only slightly more (12.68%) in a two-week span.

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