Let's talk about sentiment, because I am not sure I have ever seen it all over the map as it is now.
Thursday we looked at the Investors Intelligence bulls, who are now at 51%, where they were in late September, having been at 65% in January. There is nothing magical about 51%, since readings in the 40s tend to say "enough." (Readings in the 30s tend to say "enough already!") But surely using this particular indicator there is not a lot of bullishness out there right now. I grant you this is tallied from last Friday, so perhaps next week it will have shifted dramatically upward.
Then on Thursday, we saw the American Association of Individual Investors (AAII) out with their weekly survey where the voting closes on Tuesday, and they show bulls at nearly 50% as well. The difference being that this was a 7-point jump from last week. Perhaps it is foreshadowing what we'll see in the Investors Intelligence readings next week, but this is quite a difference where the moms and pops are significantly more bullish than the professionals.
What is interesting is that the bears didn't move much; most of the bulls came from the fence sitters.
Now, let's take a look at the National Association of Active Investment Managers, which has been a pretty solid tell on sentiment of late. A few short weeks ago, these folks had upped their exposure to the market to 108 and even the most bearish said they were 75% exposed to the market. Then the market fell. A week ago, we saw it plunge under 70. This survey is taken on Wednesday morning, so it is quite fresh, and so I was suitably shocked to see it fall even further to 48% this week.
You can see that is even lower than they were at the September lows. Heck, it's even lower than almost all of 2019. The only conclusion I can come up with is the AAII folks are playing the reopening (old economy) stocks and the NAAIM folks are playing all that new fangled high-growth futuristic technology stuff.
So, let's imagine for a minute that the market doesn't wait for us to get overbought, before it starts to head down again (not my assumption) isn't it possible in two weeks' time we could see the Investors Intelligence bulls well into the 40s and the NAAIM Exposure Index at/near or even under 40? Making them show far too much bearishness?
I am quite surprised by this NAAIM reading and encouraged. If my assumption that the AAII folks are old economy and the NAAIM are new economy, then maybe my call that Nasdaq needs to play a bit of catch up on the rally side will be correct.
You can see that Thursday's rally finally moved the needle on the Oscillator as Nasdaq's finally pushed up over the zero-line.
Finally, for more on make take of the either/or market, check out my interview with TD Ameritrade on Thursday morning. You can watch it here.
