23 OCTOBER 2025
It’s easy to forget that stock markets tumbled earlier this year with headline indices seeing drawdowns of almost 20% during the first half.
The sell-off now looks like a blip, given the speed and scale of the rebound and most of the talk now is whether or not the bull market has run its course. The chart below suggests not.
As we’ve noted before, the AAII Sentiment survey is a long-running series that captures how US investors are feeling about the stock market.
An extreme high in the net bullish reading reflects outsized optimism about future equity prices and typically suggests a major decline is on the cards. The converse is true when sentiment is heavily depressed.
So the fact this indicator is currently bang in line with its neutral reading is actually a good thing.
Although it suggests the stock market is no longer “persona non grata” (typically a strong buy signal), it also rules out that we are at the euphoric stage of a bull market rally that usually implies a big drop is approaching.
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