Traders are in ‘no man’s land’ after the latest conflicting investor sentiment data
Yes, the latest gauge of investor vibes shows uniquely high concern. No, that doesn’t mean you should follow conventional wisdom and rush into the market. The share of American Association of Individual Investors members with bearish views for the week ended on Wednesday broke above 60% , according to the organization’s closely followed survey. That marks only the sixth week it has come in higher than that level since 1987, an analysis from Bespoke Investment Group shows. What’s more, Bespoke found that the five-week growth in bearish sentiment within the survey is the third highest on record. It falls behind periods near the end of 2000 and middle of 1990. Historically, a timeframe with such high levels of negative feelings about the market has made for a good opportunity to pick up stocks. Bespoke found the S & P 500 has jumped more than 30% in the typical year after an AAII bearish reading comes in above 60%. The problem: Today’s market is anything but ordinary. “On one hand, there’s no way I’m dismissing the extreme read today,” said Peter Boockvar, investing chief at Bleakley Financial Group, told CNBC. “On the other hand, I still think it’s important that investors look at a variety of different sentiment gauges and survey measurements before they come to one conclusion. This is not a clean read.” Specifically, Boockvar pointed to the Investors Intelligence sentiment report released Wednesday. This data set showed more bulls than bears, painting a less dire picture than what AAII presented. Elsewhere, he noted that Citi’s weekly Panic/Euphoria model shows investors in “euphoria” territory. On the other side of the spectrum, CNN’s Fear and Greed Index slid into “extreme fear” after sitting in the “neutral” zone just one week ago. Taken together, Boockvar said these contrasting data points leave investors trying to take action in “no man’s land.” Gauging sentiment is “more effective when they all lean in one direction,” he said. “This is the most conflicted … group of measures that I’ve seen,” Boockvar said. “I honestly don’t know what to make of it.” ‘Shaky ground’ AAII’s survey can be specifically tough to hedge bets on, Boockvar said, given its volatility week to week. If the market were to rally into next week, for example, he said to expect a notable turnaround in sentiment. The AAII index has been criticized as focusing on a stodgy, older retail investor, which can mean the data doesn’t represent the growing community of individual traders. Indeed, data from JPMorgan underscores that purported disconnect: The bank’s latest report indicates that small-scale traders have continued to backstop the U.S. equity market — even as AAII’s survey flashes warning signs from this group. “It’s very fickle,” Boockvar said of the AAII survey. “If you look at a chart, it looks like an EKG chart.” As for why the AAII survey portrays such a gloomy outlook, Boockvar pointed to the technology-heavy Nasdaq Composite turning negative on the year. That can dampen hopes of investors who have enjoyed two years of huge gains in their megacap tech holdings, he said. .IXIC YTD mountain The Nasdaq Composite in 2025 “The Mag 7 trade is on shaky ground,” Boockvar said. “Not in terms of the companies and the quality of the companies, but in terms of the dramatic outperformance that these stocks have had.” “These stocks have literally carried the broader market on its shoulders,” the CIO added. “I think those days are coming to an end.”
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