Friday, July 20, 2012

Large Decline In Individual Investor Bullish Sentiment

The American Association of Individual Investors reported investor bullish sentiment fell over eight percentage points this week. The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months. The bullish sentiment reading of 22.19% was the lowest level since August 26, 2010 when the bullish reading was reported at 20.74%. In August of 2010 the S&P 500 Index was trading at 1,055.33. In the subsequent 12-months, the S&P rose 9.8% to 1,159.27. This one behavioral measures tends to be a contrarian indicator.

From The Blog of HORAN Capital Advisors

 Maybe this reduced bullish sentiment is warranted given the uncertainty surrounding economic growth or lack there of. Yesterday The Conference board reported the Leading Economic index declined .31% in the month of June. This was the second decline in the last three months. The Conference Board noted, "The strengths among the leading indicators have become less widespread as consumer expectations and manufacturing new orders offset gains in the financial, labor, and construction-related components. Meanwhile, the coincident economic index, a measure of current economic conditions, has risen slowly but steadily in the last three months.” The report goes on to note, “The U.S. economy is growing very slowly. The CEI basically reflects this steady but soft pace of overall economic activity. The LEI is pointing to no strengthening over the next few months, as the economy continues to sail through strong headwinds domestically and internationally.”

From The Blog of HORAN Capital Advisors

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