Bearish Sentiment is on the Rise

Time to cue up some of the bear ETFs like ProShares Short Dow30 (ETF) (NYSE:DOG) and ProShares Short S&P500 (ETF) (NYSE:SH), or even the 2X ETFs such as ProShares UltraShort Dow30 (ETF) (NYSE:DXD) and ProShares UltraShort S&P500 (ETF) (NYSE:SDS).  It seems the sentiment in the market appears to be turning bearish.  The American Association of Individual Investors has provided a survey and results  are indicating bearishness among individual investors has been back on the rise in the new year.

(AAII.com) – Bearish sentiment jumped by nearly eight percentage points in the latest AAII Sentiment Survey. Nearly 35% of individual investors said they expect the markets to trend lower over the next six months, the highest level in four weeks. The historical average for bearish sentiment is 30%.

Though the rise in bearish sentiment is notable, it should be considered within the context of market conditions. The major indexes declined twice over the over the past three trading days.

Furthermore, bullish sentiment stayed above its historical average for the ninth time out of the past 10 weeks. The survey results show 40% of individual investors expect the markets to rise over the next six months. Bullish sentiment did fall, however, coming in seven percentage points lower than a week ago.

Neutral sentiment was down fractionally to 25.3%.

This week’s AAII Sentiment Survey results:

Bullish: 40.0%, -7.4 percentage points
Neutral: 25.3%, -0.4 percentage points
Bearish: 34.7%, +7.8 percentage points
Long-Term Averages:

Bullish: 39%
Neutral: 31%
Bearish: 30%

More info here. 

About AAII.com:  From the beginning, AAII has answered the question, "Where can you go to get unbiased facts and effective knowledge about investing?"

James Cloonan, Ph.D., founded AAII in 1978 because he firmly believed that individual investors armed with effective investment education materials and a bit of dedication could outperform the popular market averages. Thirty years later, the 150,000 members of AAII report investment returns that are consistently higher than those of the stock market as a whole.