The mood of retail investors – the contrary indicator

On February 27th, 2020, the weekly AAII Investor Sentiment Bull/Bear survey showed us that more individual (retail) investing respondents became bears.

By that day, the S&P 500 had already fallen 400 points (12%) over the previous week.

In the next 5 days, the market then bounced 6% but then savagely declined 30% over the next 3 weeks.

The majority of respondents remained bearish through that “whip-saw” and the memory of that sudden damage has seen that majority maintain their bearishness since that March 23, 2020 low, all while the S&P 500 soared 58% over the next 5 months.

It’s not an exact science, but this survey is a handy tool to gauge the antithesis of the market…..being, the stance of the retail investor.

Today, the spread is narrowing. I’m looking forward to next Thursday weekly release.

In the meantime, the S&P 500 and Nasdaq are the most overbought since their February 18th, 2020 peaks.

August 28, 2020
by Rob Zdravevski
rob@karriasset.com.au

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: