This week’s individual investor Sentiment Survey released by the American Association of Individual Investors shows the percentage of investors expressing bullishness on stocks over the next six months is near a record low at 15.84%. This is the ninth-lowest reading for the weekly survey’s bullish sentiment going back to 1987.
The spread between the bullish and bearish readings equals -32.6 percentage points and has reached wider negative levels in the past; however, this week’s reading is near the spread level reached during the 2008/2009 financial crisis. In fact, the spread equaled -32.8 percentage points for the survey released during the week of November 20, 2008, when the S&P 500 Index traded at 806.58
As I often remind readers, the sentiment measures are contrarian ones and are most actionable at their extremes. And as the following chart shows, forward 12-month returns tend to be higher when bullish sentiment is at an extremely low level.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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