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AAII Sentiment Survey, 5/11/22

For the week ending on 5/11/22, Sentiment remained very negative: Bearish remained the top sentiment (49.0%; very high) & bullish became the bottom sentiment (24.3%; low); neutral became the middle sentiment (26.6%; below average). Investor concerns included high inflation; high market volatility (VIX, VXN); supply-chain disruptions; crypto-crash (there is correlation between cryptos and speculative stocks); Russia-Ukraine war (now 11+ weeks). In the Survey week (Thursday-Wednesday), almost everything was down (stocks, bonds, oil, gold) with the exception of dollar. #AAII, #Sentiment, #Markets


  • edited May 12

    Any thoughts on the following?

    VIX was down yesterday when S&P 500 was down a decent amount. VIX is having difficulty cracking 35 today.

    AAII- S&P 500 has been down about 10% since 4/28 while Bearish sentiment is also down coincidentally about 10% - focusing on the severity of the moves in the same direction rather than the percentage of the move.

    CNN fear and greed index is at 6 - the lowest in a year. (CNN is no longer giving me a long term chart of this but I do not remember seeing this low reading in ten years, except for in March 2020).

    2-10 yr rates have come down about 20 bps in the past week but not collapsing.

    The question I am asking myself is, is the stablecoin fiasco muddling some of the readings and perhaps the contagion is not systemic enough to call a bottom in the stock market?

    P.S.: Senate confirmed Powell for the second term.
  • BaluBalu said:

    P.S.: Senate confirmed Powell for the second term.

    Another bad omen.

  • edited May 12
    I was only reporting the breaking news about Powell confirmation because in a previous thread Yogi and I discussed about Powell and other Fed vacancies' confirmation. Just to be clear, it was not meant to be part of my question, "Any thoughts on the following?"

  • Markets have several crosscurrents.

    One debate is whether market is still too high by some valuation measures. With market down a lot already (Nasdaq Comp and R2000 in bear territory and SP500 approaching that) and AAII Sentiment so negative, I am willing to buy something, and certainly not selling out.

    High VIX and low SKEW condition is also interesting that happens more near bottom - may be interim if not "the" bottom.$VIX&p=D&b=5&g=0&id=p02688406778

    My thinking only defines my actions.
  • edited May 12
    Thanks for your thoughts, Yogi. It turns out I increased equity beta in my portfolio today by eliminating a covered call strategy and replacing with straight equities, though I did not increase the dollars committed.

    As a counter sentiment, many equity ETFs are still trading at a premium.
  • RE: High VIX I can understand how sentiment indicators marking greed or fear could prove useful. And valuations are indeed falling back into line a bit.

    But I see certain fears....fear of a recession and fear over the recently removed "Fed PUT" the most serious overhangs. The Fed balance sheet rolloff doesn't even start until next month. Ah, but one could argue that the market is forward thinking and that this is possibly baked in now, right?

    My thinking: Expect a tough few months for equities, with classic bear market rallies mixed in. As long as Fed backing is temporarily shelved, the market could languish or drop. Fed perception is huge.

    We had complacency in the markets for far too long. A little fear keeps us honest, and bubbles need to be popped. I'm a buyer, in increments. I don't think the bottom is close yet.
  • "I don't think the bottom is close yet."

    Makes sense, given some equity ETFs still trading at a premium.
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