AAII Bulls & Bears Sentiment Index (Blue/Bull, Red/Bear)
In the last two weeks nearly 5% correction on SP500 has been enough for retail investors to turn into more bearish mood. They are less bullish than last week according to the AAII sentiment survey.
They are broadly in risk off mood and they are more pessimistic. The optimism has been evaporated by now. This sentiment is commonly used as a short term contrarian indicator. Yes, maybe sometimes is good, but don’t overestimate the relevance of this data flow. Statistically proven that is not a perfect indication of the market, but sometimes is really helpful.
In September among the individual investors the bullish attitude was the highest since last December and you see what happened – 5% correction. By now the bullish sentiment consolidated by 6,4% which is a good sign that shortly could come a buying back opportunity. The percentage of bullish investors, those who think markets will rise in the next 6 months, fell to 35.4% from 41.8% the week before. The percentage of bearish investors rose to 30.9%, above its historical average. As the old rule says on Wall Street “Buy the pessimism and sell the euphoria.”
The BFM Assets Team.
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