Spent some time reviewing long-term history of #AAII signals, particularly when bullish reading > 50%. Initial takeaways:
1. This has happened 11 times since the 2009 low.
2. A major top has occurred only 2 times out of those 11.
3. The other 9 times were mid-stage bull markets. pic.twitter.com/kofFCV22tC— David Keller, CMT (@DKellerCMT) March 8, 2024
🏆 Today’s Chart of the Day was shared by David Keller (@DKellerCMT).
- Investors feel much more optimistic now than at the end of October, thanks to a +24.4% rally in the S&P 500.
- According to the AAII Sentiment Survey, the percentage of bulls has doubled from 23.4% at the end of October to 51.7% this week.
- David points out that this is the 11th time bulls have exceeded 50% since the 2009 low. Three of them have occurred in the past year! Only 2 of the 11 were significant tops, while the other 9 occurred mid-cycle.
The takeaway: Sentiment matters at extremes, but it’s more of a condition than a signal. Humphrey B. Neill once said it best – “The public is often right during the trends, but wrong at both ends.”