AAII Sentiment Survey, 4/13/22

yogibearbull

For the week ending on 4/13/22, the Survey turned VERY negative: Bearish remained the top sentiment (48.4%; very high) & bullish remained the bottom sentiment (15.8%; VERY low); neutral remained the middle sentiment (35.7%; above average). Russia-Ukraine war lingered on with no visible progress in negotiations or on the ground. Inflation data were very high but may be peaking (hope?); PPI > CPI meant that company profit margins may be under pressure as companies are unable to pass on their cost increases on to their customers. In the Survey week, growth stocks were down, cyclicals up, bonds down, oil up, gold up.
https://ybbpersonalfinance.proboards.com/post/585/thread

BaluBalu

while we do not put as much emphasis on the Bullish reading, I do not remember seeing a bullish reading this low in 10+ year but again we are talking about my memory!

Is it possible that PPI is higher than CPI because of supply constraints because producers can cut back producing if demand is subdued? May be it is not all demand as the Fed currently seems to think, as implied by their aggressive stance.

We have Peak inflation means the rate of change is not going to be this high but does not mean prices are going to stay stable or come down - just a lower rate of increases. Otherwise, the Fed's posture would be misplaced.

yogibearbull

That is 30-yr low for bullish reading.

BaluBalu

Very interesting. Lately, Bearish sentiment seems to run to 2 SD high on a whim at least once every month. At what point does a 2 SD Bearish sentiment lose its signal value?

yogibearbull

A very bearish AAII Sentiment, as now, may mean 2 things: 1) Market is ready for the next bull leg (but that seems unlikely to me in the face of current news), or 2) Investors are too bearish already and the market may not go down much (and I can subscribe to that, so I am not selling much except taking good profits in some "explore" positions).

BaluBalu

Good point. Next week we have three Fed officials speak, Monday - Bullard, Tuesday, and Thursday - Powell. I can not imagine much soothsaying from the Fed next week. I was hoping equities would go up today to take some recent paper profits, instead I ended up selling more of my small Muni allocation. The MUNIs I bought during 2013 taper tantrum have now dipped below zero.

bee

Linked below is commentary on the survey and some interesting "conditions" the sentiment presents investors.

Some analysts criticize the AAII’s survey methodology, and with good reason. The participants in the survey volunteer themselves, as opposed to a random telephone poll for example. And the participants may change from week to week, as individuals decide to cast a vote or not. This is not how a proper survey should be done, but doing a proper survey is a lot more expensive. And even a “proper” survey is still going to be a flawed representation of the whole population; that’s just a feature of any type of survey.

With all that said, we can move forward and look at this week’s readings of 15.8% bulls and 48.4% bears, confident that these numbers are not going to be perfectly accurate. But they can still probably be seen as useful to contemplate as a statement about investor sentiment. Sentiment reflects a “condition”, not a “signal”.

Even more noteworthy than the bull-bear spread being the worst since 2013 is the observation that the bullish percentage alone was the lowest since 1992, and it was the 9th lowest bullish percentage ever. The AAII survey only began in July 1987, so we do not know what it would have told us during any period in history before 1987.

learning_center/weekly_chart/multiyear_records_for_aaii_survey

davfor