Sentiment Goes In accordance To Seasonality

The standard seasonal September droop for shares has left the S&P 500 (SPX) down 1.5% month-to-date. Whatever the rebound previously few periods, the weak begin to the month has put a dampener on investor sentiment. Within the remaining two weeks of August, the proportion of respondents reporting as bullish to the AAII Investor Sentiment Survey got here in above 50%. Since peaking the week of August twenty second at 51.6%, bullish sentiment has now slid for 3 straight weeks and is right down to 39.8%. That’s the lowest degree of bullish sentiment and the primary sub-40% studying for the reason that first week of June.

With the drop in bulls, bearish sentiment has been on the rise. Bears got here in at 31% as we speak, which is the best degree in 5 weeks and proper in keeping with the historic common for that studying since the beginning of the survey in 1987.

Bulls falling and bears rising would imply that the survey’s bull-bear unfold has pivoted decrease. The unfold fell from a studying above 20 final week down to eight.8. Whereas that may be a important drop, bulls nonetheless outnumber bears, as has been the case for the previous 20 weeks. By the historical past of the survey, there have solely been 13 different streaks of 20+ weeks of optimistic bull-bear readings, the latest of which ended this previous April at 24 weeks.

September has traditionally been a tough month for equities from a seasonal perspective. As such, sentiment has additionally tended to be weak. The charts beneath present the common bull-bear unfold studying by month for all years since 1987 and to date in 2024. Sentiment is often strongest on the bookends of the 12 months (January and February) and tends to fall within the late-Summer season, with September marking the annual low.This 12 months has to some extent adopted that sample. Sentiment was sturdy within the first two months of the 12 months and unusually carried by way of into March. Sentiment slumped in April however started to select up by way of July earlier than reversing decrease previously two months.

The AAII survey hasn’t been the one measure of sentiment to average currently. This week’s bull-bear unfold within the Buyers Intelligence survey equally dropped, with the weakest studying since final November. The NAAIM Publicity index was modestly larger however continues to indicate fairness publicity was considerably larger a few weeks in the past. All mixed into our sentiment composite, sentiment favors bullishness, however to the weakest degree in a month.

Just like the AAII survey, though investor outlooks will not be as rosy as they have been beforehand, it has been a powerful streak of web bullish readings. Our sentiment composite has now are available in with a optimistic studying for 20 straight weeks. That instantly follows a 24-week-long streak that led to April, with just one week of bearish sentiment in between the 2. Earlier than that, there have been solely seven different streaks that lasted at the very least 20 weeks. In different phrases, it has been an impressively lengthy stretch of bullish investor sentiment.

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