- This bearishness has translated into equity outflows of mutual funds and ETFs with bond investments capturing much of the inflows.
- Foreign investors have been net sellers of equities since 2014. In 2014 they reduced equity investments by $16.1 billion, in 2015 reduced equities by $114.9 billion and year to date through May reduced equities by $34.2 billion.
- individual investor bullish sentiment remains at a low level as reported by AAII.
Additional economic and fundamental data are trending favorably as well.
- Strength in job openings report
- Positive earnings revision ratio
- Strong uptrend in NYSE advance/decline line
Lastly, in a recent report by Richard Bernstein, Rabidly Risk Averse, and a worthwhile read, he notes,
For nearly 30 years, we have surveyed Wall Street strategists for their recommended equity allocation. Through time this survey has shown to be a very reliable long-term sentiment indicator. In other words, it has historically been bullish when Wall Street suggested underweighting equities and bearish when they suggested overweighted positions.
- Wall Street recommended underweighting equities throughout most of the bull market of the 1980s and 1990s. This represents the proverbial “wall of worry” that existed throughout that secular bull market.
- Wall Street recommended overweighting equities in 1999/2000 just prior to the “lost decade in equities”.
- Wall Street again favored equities prior to the 2007/8 bear market.
- Most important, strategists have been again recommending an underweight of equities throughout the current bull market.