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The NAAIM (active money managers) survey for this week showed a modest increase in bullish sentiment while the AAII (individual investors) survey showed a 3% increase in bullish sentiment.

naaim sentiment survey and returns of the s&p 500
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This week, active managers have, on average, a 63% allocation to equities. This is up slightly from 62% last week. The median allocation rose to 83% while the top quartile of active managers have an allocation of 100% or greater to equities with the bottom quartile at a 50% or less equity exposure. The eight week moving average is now at 66%.

The NAAIM number measures current equity exposure (0% would be all cash, 100% fully invested). Additional detail can be found here.

aaii investor sentiment percentage bullish
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Individual investor’s sentiment has now increased for three consecutive weeks. Bearish sentiment fell to 23% from last week’s reading of 26%. The Bull-Bear spread is at 31%, the highest level since February 2007. On average, when the Bull-Bear spread is at or above the current level, subsequent 360 day returns on the S&P 500 are only 1.7% compared to 8% over the entire sample. The eight week moving average of bullish sentiment increased to49%.

aaii investor sentiment percentage bullish
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Individual investor sentiment is now above the “extreme” territory; measured as one standard deviation above average.

For analysis of the subsequent equity returns based on sentiment surveys please see the flowing links. AAII research here and NAAIM research here.