The Bullish S&P Signal Not Seen in 5 Years

Tidal waves of American Association of Individual Investors (AAII) optimism have preceded huge S&P 500 Index (SPX) rallies in the past

Mar 11, 2016 at 3:18 PM
facebook X logo linkedin


In mid-January, the S&P 500 Index (SPX) slipped back into correction territory, small-caps officially entered a bear market, and the number of self-proclaimed bulls hit its lowest point in more than a decade, per the American Association of Individual Investors (AAII) survey. Since then, however, the bulls have re-emerged with a vengeance -- and these tidal waves of optimism have historically preceded major S&P rallies.

Specifically, the number of self-identified AAII bulls has surged nearly 109% during the past nine weeks. Since 1987, this is just the 19th occurrence where the number of bulls has more than doubled in such a short span, according to Schaeffer's Quantitative Analyst Chris Prybal. The last time this happened was October 2010, which preceded a one-year (252-day) rally of 66.6% for the S&P 500 Index.

What's more, the SPX has averaged a one-year return of 49.1% following these signals, and has been positive a whopping 83% of the time. For comparison, SPX's average one-year return is 8.6% since 1987, with 77% positive. In fact, the last time the S&P was negative one year after this signal was 2006, just before the dawn of the financial crisis -- and the index was only 0.3% lower one year out.

Further, across all time frames that we measured, the S&P has outperformed following a massive rush of AAII bulls. For instance, 10 days after a signal, the index has averaged a gain of 1.6%, and has been positive 72% of the time. The SPX's anytime 10-day return since 1987 is 0.3%, on average, with just 59% positive. This, combined with the fact that March and April are historically good times to be long, could suggest even more upside ahead for stocks.


160311AAII1

160311AAII2



 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI