Note: As an alternative to the percentage of bullish AAII investors, I have been following the AAII investor portfolios. Those portfolios reveal AAII investors are much more bullish than their opinions on the stock market suggest. Only 23.9% of AAII investors say they are bullish on stocks, which is a very low level -- and as a contrary opinion indicator, that means we should be bullish on stocks.
... But consider the actual stock portfolios of these AAII investors in September -- Stock and stock mutual fund allocations were 63.4%. Though at a two-year low, equity exposure remains above the historical average of 61.5% for the 28th consecutive month. Allocations to stocks and stock funds were last lower in November 2020 (63.2%).
63.4% is above the historical average of 61.5% -- that's not reflecting a bearish sentiment. Being near the average, I would call 63.4% "Neutral". Based on the percentage of stocks in their portfolios, AAII investors are nowhere near their bearish sentiment at market bottoms in the past -- with roughly 40% equity allocations at the 1990, 2002, and 2009 market lows. Far below the current 63.4%.
Source of data above:
September AAII Asset Allocation Survey: Equity Exposure Modestly Declines | AAII
...... Economic Logic: AAII Sentiment -- another way to look at AAII data (el2017.blogspot.com)
Source of Data Below: https://www.aaii.com/sentimentsurvey/sent_results
My SEVEN STOCK MARKET TIMING INDICATORS were:
BEARISH on September 30, 2022
BEARISH on August 21, 2022
BEARISH on July 15, 2022
My average of seven market timing indicators, predicting stock prices over the next 3 to 6 months, is more useful than this single short term sentiment indicator.
AAII Indicator Analysis:
AAII Sentiment is a contrary opinion indicator of small investor market sentiment. When these less sophisticated investors are unusually bullish, it's time for traders to sell. When very few are bullish, it's time for traders to buy. ... This is the only short term market timing indicator of the seven market timing indicators I follow.
This short term AAII Sentiment indicator 4 week average has been bullish or moderately bullish all year, as interpreted based on past years, But unlike in past years, there was no market rebound for a long time, until after readings of an unusually low 25% bullish (very bullish as a contrary opinion) for the week ending June 15, 2022, and even lower at 23.5% bullish for the week ending 6/22/22. The bullish percentage of investors in 2022 reached deceptive LOWER troughs than in the past 16 years, making the indicator hard to interpret.
AAII Sentiment does NOT tell us if we are in a bull or bear market.
It only 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.
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. It is based on my interpretation of 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 October 5, 2022:
= BULLISH
30.4% of AAII Investors were bullish
(was 24.8% bullish = BULLISH last week)
Four Week Moving Average:
= BULLISH
28.5% of AAII Investors were bullish (unusually low)
(was 27.2% bullish = BULLISH last week)
Recommended Portfolio Cash
percentage for short term traders:
= 0%
(was 0% cash last week)
Data for the week ending 10/5/22:
23.9% were Bullish -- (under 20% is unusually low)
(was 20.0% last week)
21.3% were Neutral
(was 19.2%)
54.8% were Bearish -- (over 50% is unusually high)
(was 60.8%)
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.