Even though the rally in the S&P 500 lost steam over the past week, sentiment has soared. The latest weekly survey from The American Association of Individual Investors (AAII) showed 51.6% of respondents reported as bullish, up from 42.5% in the week prior. That's the first time in five weeks that the majority of respondents have been bullish.

Considering there was an even more elevated reading of bullish sentiment only a little over a month ago, it is worth mentioning how optimism has been consistently elevated recently. As shown below, a one-year rolling average of bullish sentiment shows that this week's reading increased to 42.5% - the highest reading since October 2007. It is also a quick turnaround versus various points last year when it was down around the lowest levels on record.

While bullish sentiment is elevated, less than a quarter of respondents considered themselves bearish. At 23.7%, this week's reading was also the lowest in five weeks. That's also a quick turnaround from the more elevated reading of 37.5% reached only two weeks ago, and the 13.8 percentage point drop over the past two weeks is the largest decline in such a span since the week of November 16, 2023.

Those corresponding moves to bullish and bearish sentiment resulted in the bull-bear spread rising to 27.9. Based on the comparisons to bullish and bearish sentiment, again this is the most elevated reading in five weeks. Zooming out, that reading is elevated ranking in the 88th percentile of all weeks since the start of the survey in 1987.

More By This Author:

Country Small-Cap ETFs
Alphabet Turns Twenty
CPI Right On Target And Other Activity - August 14, 2024