Surprise

Given the recent volatility you might think that we’d be seeing very negative signals in the sentiment data, however, the data continues to be mixed. The most recent Investor’s Intelligence survey showed bearish sentiment hold steady at 41%. This is a relatively mild level bearishness given the current environment. Previous major market bottoms have occurred at substantially lower readings.

Small investors, on the other hand, are exhibiting a bit more fear. According to the AAII small investor sentiment plummeted in the most recent week:

“Bullish sentiment, expectations that stocks will rise over the next six months, plunged 9.8 percentage points to 24.7%. This is the lowest bullish sentiment has been since November 5, 2009. The historical average is 39%.

Neutral sentiment, expectations that stock prices will remain unchanged over the next six months, edged up 0.2 percentage points to 33.3%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall, jumped 9.6 percentage points to 42%. This is the eighth consecutive week that bearish sentiment has remained above its historical average of 30%.”

Charles Rotblut at AAII detailed the move:

“The ongoing volatility in the market continues to affect individual investor sentiment. While there had been some hope two weeks ago that a short-term bottom was being established, the continued downward movement of stock prices has further frayed nerves.”