Chart of the Day - Thursday, June 8, 2023

AAII: Bulls now firmly outnumber bears for the first time in 18 months.

Should we run for the hills? In Nov '20, we saw a similar shift to optimism after 8 months of pessimism. $SPX kept trending higher for the next 12 months.

Follow trends. pic.twitter.com/h2pbgSxvtH

— Brian G (@alphacharts) June 8, 2023

Today’s Chart of the Day was shared by Brian G. (@alphacharts). We're seeing signs of bullish sentiment returning to the market. For starters, the latest cover of Barron's features the image of a bull with the headline; "Don't Fear the Bull Market Why the Stocks are Going Higher." Secondly, everybody "officially" declared it a new bull market today, with the S&P 500 closing +20% off its October lows. Lastly, Brian points out that the most recent AAII Sentiment Survey saw a huge spike in bullish sentiment, with the bull-bear spread showing its most bullish reading in 1.5 years. However, other sentiment data points like futures positioning and ETF flows suggest that investors remain bearish. While sentiment can be an excellent contrarian indicator, it's most useful at extremes. Given the conflicting data points right now, sentiment is probably not at an extreme.