From the desk of Willie Delwiche.
Bulls on the Investors Intelligence survey continued to climb while bears fell for the fifth week in a row. The bull-bear spread has now decisively cleared its August high as investors move to embrace the stock market rally.
Why It Matters: One of the missing ingredients for sustained stock market strength last year was the embrace of investors. To be fair, investors did not abandon equities from a positioning perspective and, in fact, during the record stretch of more bears than bulls on the AAII survey, equity ETFs have still seen nearly a quarter-trillion dollars of inflows. Nonetheless, rally attempts last year brought neither broad market strength (in the form of new highs > new lows) nor a meaningful expansion in optimism. In 2023, investors are seeing strength and believing that it can persist. That can become a self-fulfilling prophecy (at least for a while). Almost all of the net gains in the S&P 500 since 2015 have come with the bull-bear spread above 18.
In this week’s Sentiment Report we take a closer look at how investors are updating their views in light of the strength that has been seen in the early going of 2023.
