Investor sentiment shifts

We’ve seen a notable shift in investor sentiment.

AAII Sentiment Survey:

Pessimism surged to its highest level in more than three months, while optimism plunged. Plus, this week’s special question asked AAII members to share their thoughts about the S&P 500’s low volatility.

aaii investor sentiment

With the data, I drew a chart to see how bullish and bearish sentiment oscillates in cycles and the notable drop in optimism and spike in fear.

investor sentiment before coronavirus

The bull-bear spread chart has reversed down below its average level of the past year.

bull bear spread chart aaii sentiment

The Fear & Greed Index made up of seven different sentiment indicators is neutral now, down from Extreme Greed a month ago.

fear greed index analysis backtesting investor sentiment

One of the seven indicators is Safe Haven Demand.

Stocks and bonds have provided similar returns during the last 20 trading days. However, this has been among the weakest periods for stocks relative to bonds in the past two years and indicates investors are fleeing risky stocks for the safety of bonds.

safe haven demand

The Put-Call Ratio is another showing fear.  It is still among the highest levels of put buying seen during the last two years, indicating extreme fear on the part of investors.

So, it seems it only took a -2.6% drop to shirt investor sentiment from extremely bullish to more bearish and neutral.

bearish sentiment

We’ll see how it goes from here.

Mike Shell is the Founder and Chief Investment Officer of Shell Capital Management, LLC, and the portfolio manager of ASYMMETRY® Global TacticalMike Shell and Shell Capital Management, LLC is a registered investment advisor in Florida, Tennessee, and Texas focused on asymmetric risk-reward and absolute return strategies and provides investment advice and portfolio management only to clients with a signed and executed investment management agreement. The observations shared on this website are for general information only and should not be construed as advice to buy or sell any security. Securities reflected are not intended to represent any client holdings or any recommendations made by the firm. Any opinions expressed may change as subsequent conditions change.  Do not make any investment decisions based on such information as it is subject to change. Investing involves risk, including the potential loss of principal an investor must be willing to bear. Past performance is no guarantee of future results. All information and data are deemed reliable but is not guaranteed and should be independently verified. The presence of this website on the Internet shall in no direct or indirect way raise an implication that Shell Capital Management, LLC is offering to sell or soliciting to sell advisory services to residents of any state in which the firm is not registered as an investment advisor. The views and opinions expressed in ASYMMETRY® Observations are those of the authors and do not necessarily reflect a position of  Shell Capital Management, LLC. The use of this website is subject to its terms and conditions.

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