Investors are terrified. Such is what you would assume from recent mainstream media headlines and CNBC’s continuous run of “Markets In Turmoil.” There are also plenty of indicators suggesting that retail investors are terrified about financial markets. For example, the net percentage of bullish responses from the American Association of Individual Investors (AAII) and the Institutional Investors index (INVI) are near previous bear market lows. Such is despite the sharp rally over the last two weeks.
Despite hopes for a rally, the National Association of Investment Managers (NAAIM) shows the same bearishness.
With sentiment so negative, one would assume that a bear market was in full swing, along with an economic recession. However, while it seems investors are terrified of the market and its outlook, the sell-off since January has remained quite orderly. As shown, the S&P 500 index took almost 6-months to decline nearly 20% from its previous peak.