Bearish Sentiment Hits 7-Week High, Mimicking 35-Year Old Record Which Marked The Bottom Of The October 1990 Bear Market

Despite a weekly decrease in negative sentiment, the latest American Association of Individual Investors (AAII) survey showed bearishness still leading bullish and neutral views at 58.9% this week.

What Happened: Investor pessimism in the latest AAII survey, conducted weekly from Thursday to Wednesday, has lessened. The percentage of individual investors with a negative short-term view of the stock market declined by 3%, moving from 61.9% down to 58.9%.

The bearish sentiment continues to be above 50% for the seventh straight week. Last week, at 61.9%, the bearish sentiment had hit a 16-year high since March 2009.

Whereas with the seven-week-long streak currently, it matched a 35-year-old record. According to Subu Trade, the last time bearish sentiment was above 50% for seven straight weeks was in October 1990, which was also the bottom of that bear market.

The historical average of bearish sentiments stood at 31%, which was nearly half of the current pessimism among the participants of the AAII survey.

Meanwhile, the bullish sentiment rose to a seven-week high at 28.5%, the highest since the week ending Feb. 19, when it stood at 29.2%.

The neutral sentiment shrank from 16.3% to 12.5% this week.

See Also: Trump Pauses Tariffs After Yields Surge: ‘Bond Vigilantes Hit Another Homerun,’ Experts Point To Bond Market Panic For Reversal

Why It Matters: While seven weeks of high bearish sentiments above 50% represented the bottom of the bear market in October 1990, this week could possibly be the same, owing to the pause on tariffs by President Donald Trump, announced on Wednesday.

He cited the negotiation attempts by nearly 75 countries without any retaliation as the reason for the pause. However, experts believed that a spike in Treasury yields was the major contributor to the change in stance.

The market rebounded on Wednesday as the Nasdaq 100 climbed out of bear market territory, although it remained 13.85% below its prior peak of 22,222.61 points. The S&P 500 was still in a correction, sitting 11.23% lower than its record high of 6,147.43 points, while the Dow Jones was 9.91% down from its 52-week high of 45,073.63 points.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were lower in premarket on Thursday. The SPY was down 2.40% to $535.43, while the QQQ declined 1.81% to $457.56, according to Benzinga Pro data.

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