Bespoke points out that individual investors are shockingly getting more bearish even as the U.S. stock market hits new-all time highs:
Sometimes you see an update to an indicator and the only thing you can do is scratch your head. That is exactly what happened this morning when we saw the latest update to the weekly sentiment survey from the American Association of Individual Investors (AAII). According to this week’s survey, bullish sentiment was nearly cut in half from 35.5% down to 19.3%! As shown in the chart below, this represents the lowest reading of the entire bull market. Outlier readings like this make us wonder whether or not there was an error with the release, but if true it is yet another example of how investors are still anything but all in.
There should be no question about how much damage was done to investor’s psychology during the financial crisis. Four years into this bull market and investors still are waiting for the next shoe to drop. I’m starting to think that sentiment this bad may fuel not just a cyclical bull market, but may be sufficient to power more of a secular bull market.