Although the S&P 500 has risen 3.25% in the past week, sentiment has seen little in the way of recovery from the substantial increase in bearish sentiment earlier this month. The AAII’s weekly sentiment survey saw bullish sentiment rise just 0.8 percentage points week over week to 33.1%. While that is a few percentage points below the historical average of 37.5%, bullish sentiment is above the consistently weak range of readings observed from early 2022 through this past spring.

Bearish sentiment, on the other hand, was slightly lower falling to 34.5% this week. Like bullish sentiment, that is a few percentage points off the historical average of 31%.

The inverse moves to bullish and bearish sentiment means the bull-bear spread was modestly higher this week. However, that increase was not enough to lift it back into positive territory meaning bears outnumbered bulls in back-to-back weeks for the first time since the end of May and first week of June.

Factoring other sentiment surveys echo the recent turn toward bearish sentiment. In the chart below, in addition to the AAII survey we have added the Investors Intelligence and NAAIM Exposure Index readings to create a sentiment composite. This index plummeted in August as increasingly bearish readings were observed across all three surveys. Last week, that bearishness hit a low point of -0.45. Although it has bounced back this week, it is still in negative territory (meaning sentiment is more bearish than what has been the historical average). Just like the bull-bear spread for the AAII survey, that is the first back-to-back negative readings since May/June.

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