AAII Sentiment Improves While Other Surveys Plummet

Mar. 07, 2022 12:30 AM ET7 Comments7 Likes
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Summary

  • The AAII sentiment survey showed the percentage of respondents reporting as bullish climbed back above 30% for the first time since the first week of the year.
  • In total over the past two weeks, bullish sentiment has now risen 11.2 percentage points. While improved, that still leaves bullish sentiment several percentage points below its historical average of roughly 38%.
  • While the AAII survey results showed an improvement in sentiment, other sentiment surveys showed the opposite.

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The S&P 500 has been fighting to regain some of its lost ground in the past week, working its way out of oversold territory at Thursday's close in the process. As a result, investor sentiment has taken a more optimistic tone this week, as the AAII sentiment survey showed the percentage of respondents reporting as bullish climbed back above 30% for the first time since the first week of the year. In total over the past two weeks, bullish sentiment has now risen 11.2 percentage points. While improved, that still leaves bullish sentiment several percentage points below its historical average of roughly 38%.

AAII Bullish Sentiment

AAII Bullish Sentiment (Author)

The gains to bullish sentiment borrowed heavily from an extremely elevated reading in bearish sentiment. Last week, over half of the respondents reported as bearish after a 10.5 percentage point increase week over week. This week, that has dropped all the way down to 41.4%. That 12.3-percentage point decline was the largest drop since October 2019, when it fell 12.91 percentage points to a much lower 31%. This also marks the first time bearish sentiment rose double digits then fell double digits in back-to-back weeks since February 2016.

AAII Bearish Sentiment

AAII Bearish Sentiment (Author)

In spite of the big drop to bearish sentiment, they continue to heavily outnumber bulls with an 11-point spread between bullish and bearish sentiment. That is improved from last week's reading of -30.3 but remains at the low end of the recent range.

AAII Bull-Bear Spread

AAII Bull-Bear Spread (Author)

While the AAII survey results showed an improvement in sentiment, other sentiment surveys showed the opposite. The Investors Intelligence survey saw the lowest reading on bullish sentiment since February 2016 and the NAAIM Exposure index showed investment managers are basically market-neutral, as the index saw the lowest reading since the COVID crash. Combining all of these readings into our Sentiment Composite, the gains to AAII sentiment in the past couple of weeks has brought the composite off the lows, but current levels are still some of the most bearish of the past decade. The only lower readings were in the spring of 2020 and early 2016.

Sentiment Composite

Sentiment Composite (Author)

Original Post

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

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