AAII Bullish Sentiment Falls Off A Cliff

The National Association of Independent Investors released its weekly sentiment survey. This week bullish sentiment nosedived 17.6 points to 40.0%, while bearish sentiment rose slightly to 32.5%, which was up from 28.5% previously. Investors who described themselves as neutral rose 13.5 points to 27.5%.

Talk about a schizophrenic market! Last week we finally saw capitulation by the retail investors as they plunged into the market, taking Zimbabwe Ben at his promise not to let stocks decline. After a slight correction in the markets retail investors immediately shed their bullish inhibitions and again went back to the sideline. This is really incredible action for the AAII sentiment survey. It shows how fearful retailers are and how quick investor sentiment can change from week to week. From a contrary perspective, this survey could be seen as slightly bullish because of the large decrease in bullish sentiment after a minor correction.

The last time bullish sentiment fell by this much was back on 8-20-10, when bullish sentiment fell from 51% to 34%. The result: 4 weeks later the market was 7% higher.     

Here are the charts.

click charts for larger image

The first one is a short term chart of AAII sentiment

Here is a chart which compares AAII bullish sentiment to the S&P 500.

Finally, here is a chart which compares AAII bearish sentiment to the S&P 500

Black Swan Insights

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