If there is one takeaway from this week's sentiment survey by the American Association of Individual Investors, it's that the people who respond to the survey are prone to mood swings. After one big down day on Monday and a gap lower on Wednesday, this week's survey showed that the percentage of bullish respondents declined from 51.0% down to 34.1% for its largest one-week decline since January. While many would consider such a large decline in bullish sentiment to be a contrary indicator, the equity market's short-term performance (over the next week) has historically been mixed. Looking at the 26 prior weeks where bullish sentiment dropped by more than 15 percentage points since 2000, the S&P 500 averaged a move of 0.00% over the next week with positive returns exactly half the time. You'd be just as well off flipping a coin.
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