Markets Gripped By Pessimism As Bearish Sentiment Breaks 35-Year Record, Remains Above 50% For 8 Straight Weeks

What Happened: Despite a play alteration successful antagonistic sentiment, the latest AAII survey showed bearishness inactive starring bullish and neutral views astatine 56.9% this week.

The bullish sentiment besides declined from the erstwhile week, portion neutral sentiment roseate to 17.7% from 12.5%.

AAII survey, conducted play from Thursday to Wednesday, noted a 2% alteration successful pessimism from 58.9% to 56.9% this week; similarly, bullish sentiment besides reduced by astir 3% from 28.5% to 25.4% this week.

The bearish sentiment continues to beryllium supra 50% for the eighth consecutive week. The streak began connected the week ended Feb. 26, erstwhile it archetypal touched the 60.6% mark.

While the seven-week-long streak matched a 35-year-old grounds from October 1990, this week’s eighth week of beforehand broke each records.

According to Subu Trade, “This has ne'er happened before. Not during COVID, 2008, the dot-com collapse, oregon the 1990 carnivore market.”

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Why It Matters: The humanities mean of bearish sentiments stood astatine 31%, which was astir fractional of the existent pessimism among the participants of the AAII survey.

Whereas, historically, the bullish participants surveyed to astatine 37.5% connected an average.

Jeff Weniger, the caput of equities astatine WisdomTree, shared a graph combining each the fearfulness gauges, including VIX, AAII Bears, and Investors Intelligence survey, to reason that the S&P 500 scale ever gains aft a play of utmost fear.

“In 10 of the past 11 fearfulness spikes, the S&P 500 went connected to gains implicit the adjacent 52 weeks. Returns were often ample excessively (+31.0%, +21.0%, and truthful on),” helium said.

Similarly, Puru Saxena, the laminitis of AlphaTarget, noted that specified fearful considerations “historically led to amended than mean 52-week gains for U.S. stocks.”