One factor we track on a periodic basis falls into the investor sentiment category. There are a number of sentiment measures one can evaluate on the institutional and individual investor level. The one that is weighing on our minds currently is the fact the individual investor bullish sentiment level has not reached a level one would expect in a market like the recent one. When the S&P 500 Index is down 33.9% in 23 trading days, I would expect individual investors to become extremely bearish on equities, at least that has been the case historically.

This past week's AAII Sentiment Survey reported bullish investor sentiment at 32.9% which was only 1.4 percentage points lower than the prior week. As the below chart shows, individual investor bullish sentiment has been as low as the 20% level at the bottom of prior market pullbacks.

On the other hand newsletter writers' sentiment has declined to a significantly low level. The ratio of the bullish to bearish advisor sentiment has declined to .72. A ratio less than 1.0 indicates there were more newsletter authors with a bearish stance than a bullish one. The Investor Intelligence Advisors' Sentiment Survey studies over a hundred independent market newsletters and assesses each author’s current stance on the market: bullish, bearish or correction.

Maybe the nearly 3.3 million new jobless claims report this past Thursday influences individual investor sentiment for the coming week's report from AAII. Or maybe individual investors broadly have a sense the nearly country wide shutdown will be short lived. If there is one certainty, time will provide the answer. Until then though, and knowing no one variable illuminates the crystal ball, a lower level of individual investor bullish sentiment would be indicative of a near market bottom.