The NAAIM (active money managers) and AAII (individual investors) sentiment surveys were released Wednesday and Thursday respectively. Both showed a sizable increase in bullish sentiment.
Active managers continue to pile into equities as the NAAIM survey saw a jump in its weekly number from 68% last week to 78% this week. The eight week moving average has been trending up since last July. At 78%, the current equity exposure is now in the “extremely” bullish category (identified as one standard deviation above average).
The NAAIM number measures current equity exposure (0% would be all cash, 100% fully invested). Additional detail can be found here.
Individual investors also are increasing their outlook for the next six months. Sentiment, as measured by the AAII survey, rose from 43% last week to 49% this week, just shy of the “extremely” bullish category (identified as one standard deviation above average). The eight week moving average is at 39%. More from Charles Rotblut, editor of the AAII Journal, can be found .
With the AAII survey commonly viewed as a contrary indicator and both sentiment surveys at, or approaching “extremely” bullish territory caution should be in order. Subsequent equity returns from these levels have not historically, on average, been favorable (see AAII research here for and NAAIM research here).