Market Pessimism Hits Record: Bearish Sentiment Tops 50% For 9th Straight Week, But 'Corporate Insiders Are Now Buying,' Says Expert

The bearish sentiment, measured by the American Association of Individual Investors (AAII) Sentiment Survey, continued breaking records for another week, however, experts expect to see a “relief rally from the current levels.”

What Happened: Despite an over 1% fall in the weekly negative sentiment, the latest AAII survey showed bearishness still leading bullish and neutral views at 55.6% this week. This marked the pessimism to top 50% for nine straight weeks.

The bullish sentiment also declined from 25.4% in the previous week to 21.9% this week, while neutral sentiment rose to 22.5% from 17.7%.

Jurrien Timmer, the director of global macro at Fidelity Investments, highlighted another parameter in a X post called the “Vicker's insider buying/selling ratio.”

This ratio showed that “corporate insiders are now buying.”

That historically has been a bullish signal,” said Timmer.

Meanwhile, Tiho Brkan, who co-invests along with high net worth individuals and with multi-family offices, said in an X post that “the current situation does NOT feel, look or seem that bearish at all.”

“I would not be surprised to see a relief rally from the current levels. Such elevated levels of bearishness were often the fuel that markets use to rally higher,” he added.

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Why It Matters: According to a graph shared by Subu Trade, before the current record of nine weeks, the longest streak of seven weeks of bearishness was seen 35 years ago in the 1990s.

The historical average of bearish sentiments stood at 31%, which is a little more than half of the current pessimism among the participants of the AAII survey.

Whereas, historically, the bullish participants surveyed to at 37.5% on an average.

As of Wednesday, the Nasdaq 100 index was down 15.88% from its previous high of 22,222.61 points. The S&P 500 index was 12.55% lower, as compared to the last record high of 6,147.43 points. On the other hand, Dow Jones was 12.13% down from its 52-week high of 45,073.63 points.

The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Thursday. The SPY was up 0.16% to $536.25, while the QQQ advanced 0.18% to $455.39, according to Benzinga Pro data.