Bearish Sentiment Mirrors 35-Year-Old Pattern, Hovering Over 50% For 5 Weeks: Expert Cites 'Incredible Buying Opportunities' From Past

According to the American Association of Individual Investors (AAII), the bearish sentiment for the week stood at 52.2%, surpassing the bullish and neutral sentiments of the investors surveyed despite a drop in pessimism from the previous week.

What Happened: In the latest installment of the AAII Sentiment Survey, a weekly measure of investor sentiment collected from Thursday to Wednesday, the level of pessimism among individual investors regarding the short-term direction of the stock market declined. The bearish sentiment reduced from 58.1% to 52.2%.

However, Ryan Detrick, the chief market strategist at Carson Research, highlighted that this was the fifth straight week of the bearish sentiment hovering above the 50% mark.

The market last experienced such a trend in 2022 and 1990, he said that historically both of these periods proved to be an “incredible buying opportunity”.

AAII bears above 50% for 5 straight weeks for only the third time in history.

The first time was in Oct 1990 and that marked a major low and the other time was at the lows of the 2022 bear market.

Both times were incredible buying opportunities. Is this time different? pic.twitter.com/oI8jxD6aAa
— Ryan Detrick, CMT (@RyanDetrick) March 27, 2025

Why It Matters: As of Thursday’s close, the Nasdaq 100 index was in the correction zone again as it fell 10.91% from its 52-week high, while the S&P 500 index was 7.39% lower from its record levels. Dow Jones, on the other hand, was 6.15% down from its 52-week high.

Expectations that stock prices will rise over the next six months, or termed by AAII as the bullish sentiment, saw a 5.8 percentage point gain, reaching 27.4%. However, this figure remains significantly below the historical average of 37.5%, a trend observed for 11 of the past 13 weeks, indicating persistent low levels of optimism.

“Bullish sentiment is unusually low,” the survey stated.

Despite an 11.8 percentage point improvement, the bull-bear spread, calculated by subtracting bearish sentiment from bullish sentiment, remains deeply negative at -24.7%.

This figure is far below the historical average of 6.5%, a pattern observed for 12 of the last 14 weeks, signaling a prolonged period of negative investor outlook.

Price Action: 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, dropped in premarket on Friday. The SPY was down 0.15% to $566.22, while the QQQ declined 0.21% to $480.60, according to Benzinga Pro data.

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