It is amazing what one positive week in the equity markets can do for investor sentiment. Over the seven trading days ending on March 18th, the S&P 500 Index ($INX) is higher by more than 17%. True to form the American Association of Individual Investors reported investor bullish sentiment increased by 17 percentage points to 45.06%. The bull/bear spread came in at a positive 7% versus last weeks -27% and the week prior to last the spread was -51%.
The AAII's sentiment indicator tends to be a volatile one on a week to week basis. However, the magnitude of the switch from bearishness to bullishness s worth noting. Could this lead to the record level of sideline cash finding its way into the equity markets?