In last week's poll from the American Association of Individual Investors (AAII), bullish sentiment saw its largest weekly decline since November 2010 as investors were clearly rattled by the equity market's reaction to the Italian elections. Fast forward one week later and the S&P 500 has not only regained all of its losses from the Italian election, but it is also trading at new bull market highs.
With the market's rebound, clearly all those bulls that were so quick to move into the bearish and correction camp have now moved back into the ranks of bulls, right? Well, not necessarily. In this week's sentiment poll from AAII, bullish sentiment increased by less than three percentage points from 28.4% to 31.1%. In other words, bullish sentiment is still more than 25% lower today than it was before the sell-off from the Italian election.
In many ways, the shifts in sentiment over the last two weeks are emblematic of the entire bull market. Investors have been slow to embrace equities, and even after they commit, they already have one foot out the door.