Bespoke Investment Group echoes (with the data) what we’ve been saying herein about how bearishness among individual investors like we’re seeing presently can be a bullish indicator: emphasis mine… (and don’t forget to watch this morning’s video commentary)
In the table below, we show every time the AAII bullish sentiment has dropped below 25% after not having done so for six months. Historically, the performance of the S&P 500 following these low readings in sentiment has generally been positive with outperformance on the part of the S&P 500 versus its performance following all other AAII releases. While the average one week return is slightly negative, every other average and median return for all the time periods shown is positive. Six months later, for example, the S&P 500 was up an average of 4.51% with positive returns over 80% of the time. One year later, the S&P 500 saw double-digit percentage average and median returns with gains nearly 90% of the time.