While it appears that the future path of globally correlated risk assets is increasingly binary (or even tertiary if we include muddle-through), the AAII has just recorded one of the lowest prints for Bearish Investor Sentiment ever. At only 17.16% of respondents bearish, this is second only to the late 2010 (QE2-inspired) trough in bearishness that soon after heralded the top in risk assets for this cycle - as the rumor rally met the news negativity. This level of bearishness is over two standard deviations from long-run norms. Almost 50% of respondents are fully bullish (which explains the retail equity outflows?) which is the highest in 9 months. The ratio of bears to bulls has accelerated to almost record levels as it seems the respondents that AAII is asking are increasingly (over) confident in their nominal returns (perhaps not so much their real returns), or perhaps believe the hype of a fiat print-fest just around the corner and see only upside for USD-numeraire stock prices (even as earnings contract and outlook downgrades persist). So the next time someone tells you that the market will rally because everyone is so negative - not so much.
Upper pane is AAII Bearish Sentiment / Bullish Sentiment ratio (inverted in black) nearing record levels and the S&P 500
Middle pane is AAII Bullish Sentiment - showing nine month highs.
Lower pane is AAII Bearish Sentiment - near record lows and over 2 standard deviations below long run norms.