Sentiment Update: Individual Investor Sentiment Continues to Yo-Yo

By Seeking Delta of

Both the NAAIM (active money managers) and AAII (individual investors) sentiment surveys released last week show an increase in bullish sentiment. The biggest increase in bullish sentiment came in the AAII survey where the bullish reading rose to 47% from 40% last week. The NAAIM survey showed a modest increase.

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

click to enlarge

This week, active managers have, on average, a 67% allocation to equities. The median allocation rose to 85% 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 is now at 68%.

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

click to enlarge

Individual investor’s sentiment continued to be volatile with bullish readings over the last four weeks at 48%, 58%, 40% and 47% respectively.  The Bull-Bear spread is at 22.7% and the eight week moving average remained at 48%.

naaim sentiment survey and returns of the s&p 500

click to enlarge

Individual investor sentiment and NAAIM sentiment are now below 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.