AAII Confirms Completely Bipolar Market, Records Biggest Monthly Bearish-To-Bullish Swing In 6 Years

Tyler Durden's picture

Who'd a thunk it - the feedback loops inherent in every aspect of the stock market, courtesy of trillions of simplistic algorithms which only know to do what everyone else is doing, and get stuck in an upward grinding feedback loop, are starting to impact the (pseudo) rational thought of their carbon-based creators. According to AAII, the "net" bullish sentiment jumped to a whopping 50.9% from just 20.7% a month ago, while bears plunged from 49.5% to 24.2% over the same period. While the Bloomberg chart below shows that weekly net Bulls minus Bears read for any given period, a more indicative chart of just how manic-depressive the market has become is the following chart which tracks the monthly sequential change in the investor sentiment. Lo and behold, the most recent 4 week cumulative change is the the 4th highest since 2010, and the biggest since April 2004. In other words, all those who were screaming for an oversold market 4 weeks ago based on AAII data, are now expected to say that this is the most overbought market in 6 years. What is also notable is that the 4 week volatility on the chart itself is the highest since the March 2009 lows, further confirming that nobody knows anything, humans (at least that handful of them that still trades) have no idea what to do, and sentiment is now changing literally on a day to day basis, to keep up with the ridiculous moves in stocks. All in all, a terrific trading environment, where being late in pulling a trigger by one second can and will mean the difference between a profit and a loss.

Below is the chart showing the 4 week swing in Bull-Bear Sentiment:

And here is the weekly snapshot in the bull minus bear difference: that also is near all time records, comparable only to the sentiment shift in March 2009.

And the starkest representatation of just how insecure about their outlook speculators are, is the following chart of the 4 week vol in the Bull-Bear reading:

So, again, because we fear the bulls may keep their mouths shut here, if the AAII data last month anticipated a massive surge in stocks based on contrarian expectation, today's data confirms that the market is poised for a plunge. Will it? Of course not, because this BS metric has nothing to do with the psychology of the marginal determinant of actual stock prices - the quote stuffers, the primary dealers, and of course, the Federal Reserve itself, which is controlled by a ruthless sith lord completely impervious to such things as mere human "psychological" weakness.

h/t Credit Trader