Before today the S&P 500 Index has decline nearly 4% (still up over 15 % year to date) and individual investors have turned bearish on the market. Today, the American Association of Individual Investors reported individual investor bullish sentiment declined to 29.0 this week from 34.5% in the prior week. This is the lowest level since the last week of April when bearish sentiment was reported at 28.3%. Since April the S&P 500 Index is up 4.1% on a price only basis. As the below chart shows, the bearish sentiment level is one standard deviation below the indicator's long term average. Individual investor sentiment indicators tend to be a contrarian signals.
|From The Blog of HORAN Capital Advisors|