AAII Sentiment Survey, 2/26/25

yogibearbull

AAII Sentiment Survey, 2/26/25

BEARISH remained the top sentiment (60.8%, very high) & bullish remained the bottom sentiment (19.4%, very low); neutral remained the middle sentiment (20.0%, low); Bull-Bear Spread was -41.4% (very low; 2.3 yr low). Investor concerns: Jobs, budget, debt, inflation, the Fed, dollar, geopolitical, Russia-Ukraine (157+ weeks), Israel-Hamas (67+ weeks; cease fire). For the Survey week (Th-Wed), stocks down, bonds up, oil down, gold down, dollar down. NYSE %Above 50-dMA 50.83% (positive, barely). DJIA & SP500 fell below 50-dMA, Nasdaq Comp & R2000 were below 200-dMA. #AAII #Sentiment #Markets
https://ybbpersonalfinance.proboards.com/post/1889/thread

Observant1

It's not surprising that the Bull-Bear Spread is very low due to current events.
What does the data suggest if the Bull-Bear Spread remains at very low levels?
Are there any studies showing the potential impact to consumer spending?

yogibearbull

AAII Sentiment is contrarian for the stock market, so don't sell when Bull-Bear Spread is very low.

However, poor sentiment may hurt consumer spending, and the Fed watches UM Sentiment that hit a low in 2022 and was rebounding until recently.
https://data.sca.isr.umich.edu/get-chart.php?y=2025&m=1&n=1ar&d=ylch&f=pdf&k=5a7dcaad1e4b96b9dc6b3f57cbdaa4aa7da94555cc1e88efd642b24b4f9eec78

The federal nonmilitary payroll is only 3 million - a couple of large US corporations may have more employees (WMT, AMZN). But there may be chain reactions from sudden federal halts for payments of existing grants and contracts and federal layoffs - normally, freezes/cuts apply to new grants and contracts. The affected nonprofits, universities/colleges, companies will soon be having related layoff.

Observant1

Thanks, YBB.
I think durable poor sentiment may cause reduced consumer spending.
We'll see what happens to sentiment/consumer spending in the months ahead...

Sven

The consequences of both layoffs (government and freezing funding) could be much bigger than initially thought of on the economy. Consumer spending in 2008 was very bad and it took several years before people want to spend. The worst part is that it is all self-inflicted!

PopTart

I don't see how it's possible for companies to be able to forecast their needs and earnings with all the self-inflicted macro crap happening. Tariffs being threatened, delayed and then threatened again. New tariffs being threatened. Government layoffs and funding freezes with the resultant decrease in consumer spending. Not a positive investing environment for mom and pops like us.

Junkster

Observant1 said:

It's not surprising that the Bull-Bear Spread is very low due to current events.
What does the data suggest if the Bull-Bear Spread remains at very low levels?
Are there any studies showing the potential impact to consumer spending?

Subu Trade (check X) has such a study, Maybe YBB can post the study. Bulls minus Bears greater than 40 very rare. Before this latest print had only occurred 10 times since 1990.
In almost all cases the S@P was higher 2,3,6,9 months and one year later. 13.67% six months, 19.17% nine months, and 22.01% a year out,

Observant1

Thanks for providing context, Junkster!

hank

I would not overreact to these numbers. The still very high percentage (a record high at last check) of retail investor wealth held in stocks is much more telling. I’m willing to give some credence to the theory among some that the passive index based equity flows, largely into retirement accounts, is fueling the passive bid and keeping the most expensive market segments aloft. I can’t prove that, but I am exercising more than an ounce of caution.

Unrelated perhaps - But just as retail investor interest in gold was ramping up the metal has lost a bit of steam - off more than $100 from its record high of a week ago near $2900. $3,000. That’s chump change as gold goes at this point. I suspect gold will run a lot higher. But not willing to take a chance on it. Have a very small hold in GGN which has (somewhat surprisingly) lost a bit over the short time since buying. If my eyes are not deceiving me, oil has fallen below $70 today which, along with gold, helps explain the hit to GGN.

The 10 year chart at M* doesn’t reflect the disastrous runs gold and gold & p/c mining funds endured in the past. Pulling up 15-20 year charts for gold & mining funds would be very enlightening. Look before you jump.

Sven

Next Tuesday, March 4th is when tariffs will start with Canada and Mexico (25%) and China. There has been talk about EU in next too.. Will investor sentiment improve?