AAII Bulls Retreat to Pre-Election Lows

Bulls declined in the latest AAII weekly sentiment survey, while bears rose

Apr 6, 2017 at 11:39 AM
facebook twitter linkedin


Stocks have been on a roll since the early November presidential election in the U.S., with the S&P 500 Index (SPX) up 10% from its Nov. 8 close, and fresh off a March 1 record high. However, the rally -- which has been inspired by President Donald Trump's promises of big infrastructure spending, tax reform, and deregulation -- has lost a bit of steam lately, and as Schaeffer's Senior V.P. of Research Todd Salamone noted in this week's Monday Morning Outlook, "skepticism is growing with regards to the 'Trump Trade.'"

One sign of this increasing caution is a recent rise in short interest on the S&P, PowerShares QQQ Trust (QQQ), and Russell 2000 Index (RUT). Additionally, Schaeffer's Quantitative Analyst Chris Prybal recently noted that the latest American Association of Individual Investors (AAII) weekly sentiment poll showed the lowest reading on bullish sentiment since Nov. 2 -- just ahead of the U.S. election -- down 1.9 percentage point to 28.3%, well below the historical average of 38.4%. Plus, AAII bulls haven't been north of the 50% marker for 118 weeks, the longest streak on record.

Echoing this indication of growing pessimism, the number of "neutral" respondents edged down 0.3 percentage points to 32.1%, while self-identified bears surged 2.2 percentage points to 39.6% -- significantly higher than the historical average of 30.3%. Prybal notes that the collective number of neutral and bearish respondents is also at its highest perch since Nov. 2. What's more, the 10-week moving average of AAII bears has now surpassed that of AAII bulls.

AAII bulls_bears v sp500

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

SCHAEFFER'S JULY STOCKS REPORT AD
 


 


 
Special Offers from Schaeffer's Trading Partners