“Small investors are getting very bullish on the equity market again. The latest reading from AAII showed the highest level of small investor sentiment since December which was the highest sentiment reading since early 2012. As you can see in the chart below, this puts us above the “extreme bullishness” range that has typically been consistent with a risk equity market environment.
AAII has more details here…”
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It is a moderate signal at best – about the 77th percentile for bullishness over the full history of the AAII survey.
When sentiment hit this level in early 2012 (as mentioned in the article), the S&P kept rising and gained 10% over the next 3 months. That was from a 48.88% bullish level, or 83rd percentile.