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Thursday
Apr122012

Bullish Sentiment Collapses

Investors have been extremely skittish throughout this entire bull market due to the bad taste left in their mouths from the crash during the financial crisis.  This skittishness has caused investors to head for the hills at the slightest hint of a pullback, and we saw this once again over the last week.  With the S&P 500 down more than 4% from its bull market highs, AAII Bullish Sentiment fell from 38.17% down to 28.14% over the past week, or 26.28%. (AAII Bearish Sentiment rose 49.5% as well.)

Over the last five years (which includes the financial crisis and the current bull market rally), AAII Bullish Sentiment has had a weekly drop of 25% or more 19 times.  Below we highlight the S&P 500’s change over the next week, month and three months following these big weekly drops in bullish sentiment.  As shown, the S&P has...

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