Chart of the Day – Friday, August 9, 2024

The % of Bulls in the Investors Intelligence Sentiment Index moved down over 17% in the past 2 weeks (from 64.2% to 46.9%). That’s the biggest 2-week % drop in Bulls since the October 1987 crash. $SPX pic.twitter.com/4btxwRuUKX

— Charlie Bilello (@charliebilello) August 9, 2024

Today’s Chart of the Day was shared by Charlie Bilello (@charliebilello).

• The S&P 500 was unchanged this week (-0.04%) despite an ugly start. It opened lower by -3% on Monday, sending the Volatility Index ($VIX) to its third-highest reading of all time.

• Bulls have vanished recently. Charlie points out that The Investors Intelligence Survey saw the largest 2-week drop in Bullish sentiment since the 1987 crash. Bulls dropped from 64.2% to 46.9%.

• As a bull market matures, investors become overconfident and complacent. However, investors still clearly lack conviction. This is exactly why corrections are ‘healthy.’ They shake out the weak hands and reset sentiment to more sustainable levels.

The Takeaway: Bullish sentiment has plunged recently. At the end of a bull market, investors become complacent, but they’re still nervous these days. It only took a single-digit decline to scare them away.