Sentiment Update: Moving Higher

By Seeking Delta of

The NAAIM (active money managers) and AAII (individual investors) sentiment surveys were released Wednesday and Thursday respectively. Bullish sentiment in both surveys increased from last week.

NAAIM (National Association of Active Investment Managers) Survey of Manager Sentiment

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This week, active managers have, on average, a 72% allocation to equities. This is up from 67% last week. Bullish sentiment is once again nearing “extreme” levels. The median allocation remains at 80%, unchanged from last week’s survey. 25% 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 continued its uptrend, now at 60%.

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

aaii data

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Individual investors increased their bullish sentiment for the next six months. Sentiment, as measured by the AAII survey, increased from 47% last week to 50% this week. Bearish sentiment also declined from last week (26.8% to 25.2% this week) with more investors moving to neutral (23.2% to 26.1%). The eight week moving average increased to 45%, which is a level last seen in March ‘07.

While neither survey shows “extreme” bullish sentiment both remain above average. For research on subsequent equity returns based on sentiment please see the flowing links. AAII research here and NAAIM research here.