A Stock Market Indicator Seen Only Twice Since 2009 Is Flashing. History Says This Will Happen Next.
Since 1987, the American Association of Individual Investors (AAII) has measured market sentiment with weekly surveys. Investors answer a simple question: Do you feel the stock market over the next six months will be up (bullish), no change (neutral), or down (bearish)? The survey runs from Thursday to Wednesday, and results are published on Thursday morning.As of March 20, bearish sentiment has exceeded 50% in four consecutive weeks. That level of pessimism in any given week is relatively uncommon, but it is very rare for investors to be so negative in four consecutive weeks. In fact, only twice since 2009 has bearish sentiment exceeded 50% in four straight surveys.Importantly, the AAII investor sentiment survey is commonly seen as a contrarian indicator, meaning the stock market tends to perform very well following periods of elevated bearish sentiment. Indeed, history says the S&P 500 (SNPINDEX: ^GSPC) could advance 23% in the next year. Here are the important details.Continue reading
Since 1987, the American Association of Individual Investors (AAII) has measured market sentiment with weekly surveys. Investors answer a simple question: Do you feel the stock market over the next six months will be up (bullish), no change (neutral), or down (bearish)? The survey runs from Thursday to Wednesday, and results are published on Thursday morning.
As of March 20, bearish sentiment has exceeded 50% in four consecutive weeks. That level of pessimism in any given week is relatively uncommon, but it is very rare for investors to be so negative in four consecutive weeks. In fact, only twice since 2009 has bearish sentiment exceeded 50% in four straight surveys.
Importantly, the AAII investor sentiment survey is commonly seen as a contrarian indicator, meaning the stock market tends to perform very well following periods of elevated bearish sentiment. Indeed, history says the S&P 500 (SNPINDEX: ^GSPC) could advance 23% in the next year. Here are the important details.
