Short term indicator AAII Sentiment remains Very Bullish (but my seven market timing indicator average remains Bearish) -- 0% cash recommended for traders

  Data Source:

 https://www.aaii.com/sentimentsurvey/sent_results

 

My seven STOCK  MARKET  TIMING  INDICATORS were:

 

BEARISH on June 12, 2022

https://el2017.blogspot.com/2022/06/the-economic-logic-stock-market-timing.html

 

 BEARISH on May 1, 2022

https://el2017.blogspot.com/2022/05/as-i-warned-on-april-17-economic-logic.html

 

MODERATELY  BEARISH on April 17, 2022:

https://el2017.blogspot.com/2022/04/economic-logic-stock-market-timing.html

 

NEUTRAL on March 11, 2022:

https://el2017.blogspot.com/2022/03/economic-logic-stock-market-timing.html   

 

MODERATELY  BEARISH on February 8, 2022:

https://el2017.blogspot.com/2022/02/economic-logic-stock-market-timing.html

 

My average of seven useful indicators works better than any one market timing indicator, especially this one in 2022 ! 

 

Indicator  Analysis:

This is an indicator of small investor market sentiment. When these less sophisticated investors get unusually bullish, it's time for traders to sell. When very few are bullish, it's time for traders to buy. It is a contrary opinion indicator. I interpret the percentage bullish based on observations from 2005 through 2021. That methodology does not seem to be working this year.

This is the only short term market timing indicator I track, of the seven market timing indicators I follow.

This short term AAII Sentiment indicator has been bullish for 20 weeks in a row, as interpreted based on past experience, indicating that the stock market is oversold. But unlike in past years, so far there was no immediate market rebound. This week may be an exception The last time this indicator was so bullish was from May through August 2020. 

With this indicator, you can look back after a year is over, and see that the lowest AAII bullish levels were good buying points for trader,, and the highest AAII bullish levels were good selling points for traders.  I have determined high and low percentages of bullish small AAII investors real time by historical precedent -- I've been tracking these data weekly since 2005. There's no reason the bullish percentage of investors in 2022 can not reach LOWER troughs than in past years. So far 2022 appears to be such as year. With the high inflation, high energy prices, low consumer comfidence and low confidence in the President's party, the troughs of bullish AAII investors seem to be lower in 2022 than in the past 16 years. That has been especially true this week and last week -- it's hard to believe AAII investors could get more bearish, and that is a bullish signal for investors. Traders should buy when investor confidence is unusually low -- it was unusually low last week and this week.

 

Looking back after 2022 is over, it's possible the AAII indicator worked for short term traders. It just didn't work based on the old standards -- observations from 2005 through 2021. But ... I'm still looking for a replacement stock market sentiment short term indicator anyway. Fortunately, I use seven market timing indicators because I expect at least one to stop working in a given year.

 

AAII Sentiment does NOT tell us if we are in a bull market or a bear market. It tells us if stocks are "overbought" or "oversold".  It only tells us if buying stocks today is a good idea for the next few weeks. This weekly indicator can change a lot in a few weeks. AAII Sentiment is a contrary opinion sentiment indicator, so it is bullish when AAII individual investors are bearish, and vice versa, recommending from 0% to 100% cash in a common stock portfolio. Based on market sentiment from an anonymous online poll of members of the American Association of Individual Investors (AAII).  The four-week moving average has much less volatility than weekly data, but active stock traders should prefer the weekly data.

 

Week Ending on June 22, 2022: 

= BULLISH

23.5.% of AAII Investors were bullish (unusually low)

(was 25.0.% bullish = BULLISH last week) (unusually low)

 

Four  Week  Moving  Average: 

= BULLISH

31.4% of AAII Investors were bullish

(was 32.3% bullish = BULLISH last week)

 

 

Recommended Portfolio Cash

percentage for short term traders: 

 = 0%

(was 0% cash last week)

 

 

Data for the week ending 6/22/22: 

18.2% were Bullish (under 20% is unusually low)
   (was 19.4% last week)

22.5% were Neutral  (under 25% is unusually low)
    (was 22.2%)

59.3% were Bearish (over 50% is unusually high)

    (was 58.3%)

 

 

AAII  Indicator  Analysis:

    ( over 80% is Bearish )

( 71% to 80% is Moderately Bearish )

( 50% to 70% is Neutral )

( 40% to 49% is Moderately Bullish ) 

  ( under 40% is Bullish