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Frequent Contributor

Re: AAII Sentiment Survey


@rac98g wrote:

Thanks for continuing to share this information!  In the history of the survey, do you happen to know what was the highest reading for the bearish sentiment?  Also, when was this recorded?


Historical data for bearish sentiment

Avg  30.42%

SD  9.50%

Current  50.00% [so it is well over 1SD above avg and quite high; higher readings have been fleeting]

Max  70.27% on 3/5/09 [the financial crisis bear market low was 3/6/09]

But in the week before, it was 55.14% and in the week after 54.47%. 

YBB
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Explorer ○○

Re: AAII Sentiment Survey

I know that AAII has been conducting these "surveys" for a long time but frankly they are worthless. At best they represent the gut feelings of a small unidentified group, there is no assurance whatever that they might really represent a significant fraction of the AAII membership. The Journal Editor, in an article sometime ago, compared the reported results with market history and concluded that at best the survey history was a contrary indicator.

No one would want to actually act on the survey results/history.

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Frequent Contributor

Re: AAII Sentiment Survey

For the week ending on 4/29/20, a shift kept bearish the top sentiment [still 1SD+ above avg] but made neutral the bottom sentiment.

Survey Results for Week Ending 4/29/2020

Data represents what direction members feel the
stock market will be in next 6 months.

 

HISTORICAL AVERAGE: 38.0%
 
 
BULLISH
30.6%
 
+5.7
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
 
NEUTRAL
25.4%
 
+0.2
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
 
BEARISH
44.0%
 
-6.0
Percentage point
change from
last week
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Frequent Contributor

Re: AAII Sentiment Survey


@DEM wrote:

I know that AAII has been conducting these "surveys" for a long time but frankly they are worthless. At best they represent the gut feelings of a small unidentified group, there is no assurance whatever that they might really represent a significant fraction of the AAII membership. The Journal Editor, in an article sometime ago, compared the reported results with market history and concluded that at best the survey history was a contrary indicator.

No one would want to actually act on the survey results/history.


My bold added above.  Of course, anyone familiar with sentiment type info, knows that IT IS A CONTRARY INDICATOR.  Investors are terribly wrong at market tops and bottoms.  These indicators show this.

Another that I use is the sentiment and opinions of people posting on the forums.  They are almost universally wrong.  Such as, during the last month, the vast majority of posters considered the market would retest the past market low.  This was a red flag that this would not happen.  So far, no retest of lows has occurred.  When we see broad posters stating they are  buying again, perhaps the retest of lows will occur.

It's the nature of markets.  It's what being a contrarian investor is about.  It's why the broad general public is universally wrong.  They strongly buy mutual funds at market tops, and shy away or sell at bottoms.  All this is measurable.

R48

 

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Frequent Contributor

Re: AAII Sentiment Survey

@retiredat48 makes good points.

Sentiment indicators are indeed contrarian indicators. They have usefulness only when they reach high or extreme values. But if one doesn't watch them, one wouldn't know what high/extreme readings are. In reply to a poster question, I pointed out that the bearish reading last week was on the high side [50+] but it didn't reach an extreme value - we may yet see that in the next few months.

Sense of contemporary M* posts is also similar to AAII Sentiment Survey.

No one should rely on any single indicator.

This thread has run continuously since November 2012. 

 

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Re: AAII Sentiment Survey

I'm going to put all fears to rest as the ultimate contrarian indicator. I predict we are in the second inning of a double header that will take us at least 30- 40% lower before this is over. Now, if that's not an indication to take out another mortgage, borrow from loan sharks and steal from your family to buy stocks, I don't know what is. You are very welcome!!

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Re: AAII Sentiment Survey

 

So, there seems to be some doubter posters...doubting the usefulness of this sentiment info...even making fun of it.

Well, let's test this.

Here is Yogi's post of sentiment info,  Jan 21 2020:

"For the week ending on 1/22/20, bullish remained the top sentiment [at 15-mo high] and bearish remained the bottom sentiment."
 
As a contrarian to this glee, I further posted in January in another reply in this thread:
 

"Hmmmm...yellow flag going up.  I recently started making some stock fund sales to support yr2020 RMD/IRA distributions."

---------------------------------------------------------------------------------

I further posted the following in later January in another "Melt-Up"  thread: "That I started preparations for taking my 2020 IRA Required Minimum Distributions, by selling some equity stock mutual funds.  Strategic sales...the first being just before the first corona virus news.  This virus-news triggered me to sell more...and more quicker, ending in a week.  2020 RMDs now covered. " 

----------------------------------------------------------------------

This is exactly how this information can be useful.  Sure glad I started selling stock funds in January, when everyone was giddy!

Contrarian investing.

 

R48

 

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Frequent Contributor

Re: AAII Sentiment Survey

From Cycles Research newsletter excerpts in current Barron's [note blue highlights]:

"April 30: The market is likely to move higher. The fuel for a bull market is excess liquidity and much pessimism, and we have plenty of both. The major indexes have retraced a substantial portion of the February-March decline. The S&P exceeded its 38.2% retracement level two weeks ago and rose above the 50% mark last week. It is now forging ahead of the 61.8% retracement level, which the Nasdaq 100 has already done. In fact, if a market rises by more than 30% off a low after such a wicked decline as this market has done, it doesn’t tend to drop below the prior low. This is very constructive price action...Many market followers are allowing uncertain and bearish fundamentals to color their outlook toward pessimism...

Here are some sentiment reasons to remain constructive.

The AAII poll of investors has averaged more than 46% of investors as bearish over 10 weeks. This is one of the longest runs of pessimism on record. In fact, the percentage of bulls fell by 10% over the past week, and the market took off this week. This is perfect contrary opinion.

Trend-following hedge funds still don’t believe in this rally. Despite the gain in the S&P, hedge-fund exposure has decreased and remains negative.

We can be most certain of the following: The injection of liquidity into the system will result in another inflationary asset bubble in the coming years. My projection is that most of the liquidity will move into real estate and into gold."

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Re: AAII Sentiment Survey


@yogibearbull wrote:

From Cycles Research newsletter excerpts in current Barron's [note blue highlights]:

"April 30: The market is likely to move higher. The fuel for a bull market is excess liquidity and much pessimism, and we have plenty of both. The major indexes have retraced a substantial portion of the February-March decline. The S&P exceeded its 38.2% retracement level two weeks ago and rose above the 50% mark last week. It is now forging ahead of the 61.8% retracement level, which the Nasdaq 100 has already done. In fact, if a market rises by more than 30% off a low after such a wicked decline as this market has done, it doesn’t tend to drop below the prior low. This is very constructive price action...Many market followers are allowing uncertain and bearish fundamentals to color their outlook toward pessimism...

Here are some sentiment reasons to remain constructive.

The AAII poll of investors has averaged more than 46% of investors as bearish over 10 weeks. This is one of the longest runs of pessimism on record. In fact, the percentage of bulls fell by 10% over the past week, and the market took off this week. This is perfect contrary opinion.

Thanks @yogibearbull, I don't follow the sentiment so much. I may start. I did see this in Barron's, however. I also noticed Buffett remained relatively passive during all this craziness. Also, that his portfolio is off 19% YTD.  Most of us here have done much better I suspect. I wonder if that is contrarian viewpoint or a bit of sage wisdom. The future will let us know.  Aside to @retiredat48, the only thing I was poking fun at in my (in)ability to market time. I do remember the melting up thread. A lot of us started trimming our risk in observance of JRinNYs post. I only remember one train conductor that was recommending everyone hop on board sometimes several times a day. In hindsight, I wish I'd have trimmed more. Stay well everyone.

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Frequent Contributor

Re: AAII Sentiment Survey

For the week ending on 5/6/20, the bearish sentiment became high [50+; 7-yr high; consistently high for 9 weeks] and the neutral and bullish sentiments were tied. 

Survey Results for Week Ending 5/6/2020

Data represents what direction members feel the
stock market will be in next 6 months.

 

HISTORICAL AVERAGE: 38.0%
 
 
BULLISH
23.7%
 
-6.9
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
 
NEUTRAL
23.7%
 
-1.7
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
 
BEARISH
52.7%
 
+8.6
Percentage point
change from
last week
 
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Frequent Contributor

Re: AAII Sentiment Survey

For the week ending on 5/13/20, bearish remained the top sentiment [high at 50+] and bullish became the bottom sentiment.

Survey Results for Week Ending 5/13/2020

Data represents what direction members feel the
stock market will be in next 6 months.

 

HISTORICAL AVERAGE: 38.0%
 
 
BULLISH
23.3%
 
-0.4
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
 
NEUTRAL
26.1%
 
+2.4
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
 
BEARISH
50.6%
 
-2.0
Percentage point
change from
last week
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Frequent Contributor

Re: AAII Sentiment Survey

For the week ending on 5/20/20, bearish remained the top sentiment and neutral became the bottom sentiment. It seems that the period of extreme bearishness has passed for now.

Survey Results for Week Ending 5/20/2020

Data represents what direction members feel the
stock market will be in next 6 months.

HISTORICAL AVERAGE: 38.0%
 
BULLISH
29.0%
 
+5.7
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
NEUTRAL
26.0%
 
-0.1
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
BEARISH
45.0%
 
-5.6
Percentage point
change from
last week
YBB
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Contributor ○○

Re: AAII Sentiment Survey

Thanks, Yogi! Since I became aware of this as a contrarian indicator, (in addition to the opposite of my gut reaction), I've been looking forward to this all week. As the market grinds higher and higher I expected the indicator to possibly be bullish. My question is, if using the sentiment as a contrarian indicator, do you use the net positive/negative or rather trend? I see the trend suggests bullish while the net is still bearish. Perhaps the trend is a cannery in the coalmine. As always thanks for your insight.

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Re: AAII Sentiment Survey

For the week ending 5/27/20, bearish remained the top sentiment and neutral remained the bottom sentiment. For the 2nd week, the Survey continued to be less bearish. Bull-bear spreads were as follows:

01/23/20   +20.83%   [YTD peak for the spread]

02/20/20   +11.89%   [stock crash began 2/19/20]

03/05/20   -0.90%   [bond crash began 3/5/20]

03/26/20   -19.17%   [depths of stock and bond crashes were around 3/23/20]

05/07/20   -28.99%   [YTD bottom for the spread]

05/28/20   -9.06%   [the current spread]

If the spread high-low hold, note that the spread peaked well ahead of the stock market peak, and bottomed well after the depths of stock and bond market crashes. Of course, the events were happening in the Internet-time. And here we are now with the SP500 above 50-dMA and 200-dMA [Nasdaq Comp has been like that since mid-April]. In contrast, the economic data will be terrible for a while; many rent/mortgage forbearance will end soon without much change yet in the job situation.

Survey Results for Week Ending 5/27/2020

Data represents what direction members feel the
stock market will be in next 6 months.

 

HISTORICAL AVERAGE: 38.0%
 
 
BULLISH
33.1%
 
+4.1
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
NEUTRAL
24.8%
 
-1.2
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
BEARISH
42.1%
 
-2.9
Percentage point
change from
last week
 
YBB
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Frequent Contributor

Re: AAII Sentiment Survey

Thanks Y...bump.

R48

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Contributor ○○

Re: AAII Sentiment Survey

I smell something in the air and "bull" is only the the first half of the word. Be careful, everyone. 

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Explorer ○○○

Re: AAII Sentiment Survey

Hi.

After reading all this, I think I will sit on my cash and do nothing with my equity portfolio. No bonds except a small holding in Van. Int. Term Tax Exempt Muni (I forget the ticker, never look at it). Being old, those equities will be my kids problem. All that I am looking at is whether there will be a vaccine. If not, I fear that wars have started as a result of what economies will look like.

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Re: AAII Sentiment Survey

For the week ending on 6/3/20,  bearish remained the top sentiment and neutral remained the bottom sentiment. For the 3nd week, the Survey continued to be less bearish and bull-bear spread narrowed.

Survey Results for Week Ending 6/3/2020

Data represents what direction members feel the
stock market will be in next 6 months.

 

HISTORICAL AVERAGE: 38.0%
 
BULLISH
34.6%
 
+1.5
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 31.5%
 
NEUTRAL
26.6%
 
+1.8
Percentage point
change from
last week
 
HISTORICAL AVERAGE: 30.5%
 
BEARISH
38.9%
 
-3.3
Percentage point
change from
last week
 
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