Sentiment Update: Investor Bullish Sentiment Remains High

Both investor sentiment surveys I follow show bullish sentiment remains wells above average despite a slight drop this week. The NAAIM (active money managers) survey for this week showed a minor decrease of 1.6% in bullish sentiment while the AAII (individual investors) survey showed an decrease of 3.6%.

This week, active managers have, on average, a 77% allocation to equities. This is down from 79% last week. The median allocation fell to 86% while the top quartile of active managers have an allocation of 100% or greater to equities with the bottom quartile having a 50% or less equity exposure. The eight week moving average is now at 73%. The 77% bullish allocation, while lower than last week, is still high by historical standards.

The NAAIM number measures current equity exposure (0% would be all cash, 100% fully invested). Additional detail can be found here.

Individual investor’s bullish sentiment stands at 52% this week from 56% in the prior week. Bearish sentiment rose to 23% from last week’s reading of 18%. The Bull-Bear spread is at 29%, well above the series average of 9%. The eight week moving average of bullish sentiment increased to 53%.

Investor sentiment remains at historically high levels. Bullish sentiment in both surveys is greater than one standard deviation from average.

For analysis of the subsequent equity returns based on sentiment surveys please see the flowing links. AAII research here and NAAIM research here.

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