The weekly American Association of Individual Investors (AAII) survey taken on April 20th fell to a new post-election poll reading of 25.7% Bullish. The prior post-election low had been 28.3% for the week ended April 6, 2017. The reading was the lowest since 23.64% which occurred just prior to the election on November 3, 2017. The week before the election low had been the lowest since June 2016. The bearish reading was 38.7% which was up from 37.4% in the prior week. The bearish reading has been above 37% bearish for four consecutive weeks. The last time that happened was for the four consecutive weeks which began on January 7, 2016.
The Bull to Bear spread or differential increased to a negative 13.0 as compared to the second highest post-election reading of a negative 16.5 which occurred on March 9, 2017. The reading has been negative for six of the last seven weeks and for the past four consecutive weeks. The last time that the reading had been negative for four consecutive weeks was the four weeks prior to the election.
It was very surprising that the number of bulls declined and the Bull to Bear Spread remained negative. It’s because the S&P 500 on April 20th, the day that the survey was taken had its best up day since March 28th.
Many pundits have made the argument that individual investor sentiment is a contrary indicator. They argue that instead of selling investors should be buying when the Bull-Bear Spread turns negative. However, the historical AAII statistical survey data that I have analyzed does not support this thesis. For example, on July 30, 2015, which was prior to the S&P 500’s significant correction that occurred in August 2015, the spread went to a negative 19.6 from a positive 6.9 on July 23, 2015. Additionally, the change was the widest negative spread that the ratio had been at when compared to the other negative readings that had occurred in the prior 100 weeks. The spread remained negative for five straight weeks and the S&P 500 went from 2108 to as low as 1867 during the five week period, a decline of 11%. The same thing happened in January 2016. The ratio went from positive to a negative on January 7, 2016 and remained so for seven consecutive weeks. During the period the S&P 500 went from 1990 to as low as 1810, a decline of 9%.
My April 17, 2017, “All Signs Point to Bull’s Peak and Bear’s DOB On 3/01/17” article provided the rationale behind my prediction that the historic high for current bull which began on March 9, 2009, was set on March 1, 2017. See also, my “Correction Coming: Market’s Ripe and Ready” March 26, 2017 article.
Since the S&P 500 is within 2% of its all-time high investors should give serious consideration to liquidating their holdings in the market prior to a crash or correction happening. The video below entitled “Crash! & 90/10 Crash Protection Strategy” is about the only safe solution that one can utilize to protect their liquid assets against crashes, corrections and recessions.
Finally, I am predicting that the decade ending 2020 will be recorded by historians as having been the best ever for investors to build dynastic wealth of 10- to 100-times investment from a diversified portfolio of privately held digital companies. I recommend that you watch the video below entitled “Decade ending 2020, best ever for creating instant dynasty wealth”. Dynasty Wealth specializes in finding and following primarily first mover and disruptor companies for its investor members which have the potential to multiply by 100X or more within five years.
Additional videos about producing dynastic wealth are available at http://www.dynastywealth.com/video.php. In-depth information about both my past and current predictions is available at www.michaelmarkowski.net.
Michael Markowski
Michael Markowski writes for www.equities.com.
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