Average Forward S&P 500 Returns Following Large Declines in U.S. Equity Sentiment Indicator When the GS sentiment indicator reaches such a low level, the S&P 500 typically delivers an average forward two-week return of approximately +125bps, with a positive hit rate of 70%. Image: Goldman Sachs Global Investment Research
Earnings Sentiment (Analyst Upgrades Minus Downgrades Across Markets) Earnings sentiment in the S&P 500 remains negative but has shown slight improvement recently. Image: Goldman Sachs Global Investment Research
U.S. Equity Sentiment Indicator – Equity Positioning The U.S. equity sentiment indicator has declined to -1.2; however, such sharp drops in sentiment often signal the potential for above-average S&P 500 earnings in the next three months, suggesting potential for a contrarian rebound. Image: Goldman Sachs Global Investment Research
Investor Sentiment (Retail & Institutional Composite) vs. S&P 500 Index Markets typically reach their correction lows when combined investor sentiment is extremely negative, setting the stage for a potential rebound. Image: Real Investment Advice
Combined AAII & II Sentiment For contrarian investors, the current bearish sentiment indicated from the American Association of Individual Investors (AAII) and Investors Intelligence (II) surveys could signal a potential bullish opportunity. Image: Topdown Charts
Average Percentile of Sentiment Indicators While sentiment and positioning were highly bullish at the end of 2024, recent setbacks have emerged. The resurgence of “Trumponomics” has increased volatility, prompting investors to adopt more defensive strategies. Image: Goldman Sachs Global Investment Research
Sentiment – 5-Day Put/Call Volume Ratio The 5-day moving average of the put/call volume ratio has hit its lowest point since late 2021’s bull market peak. Sustained low readings in this ratio often indicate market tops and excessive optimism. Image: Deutsche Bank Asset Allocation
Sentiment – CBOE Equity Put/Call Ratio The current U.S. equity put/call ratio indicates a broadly bullish sentiment, implying that investors are confident about the market’s future performance, for now. Image: The Daily Shot
Market Sentiment Indicator Morgan Stanley’s market sentiment indicator has recently turned positive, signaling a shift towards a risk-on appetite after maintaining a neutral stance. Image: Morgan Stanley Research
Sentiment – NFIB Small Business Optimism Index In November, the NFIB Small Business Optimism Index increased by 8 points to 101.7, driven by the recent election results, potentially boosting employment, investment, and economic activity. Image: J.P. Morgan
Sentiment – U.S. Composite Put/Call Ratio The sharp decline in the U.S. put/call ratio to very low levels signals widespread market complacency, as even typically anxious investors appear unworried. Image: Morgan Stanley Wealth Management