Data #1
AAII Bearish Sentiment >60% = Good!
What’s Happening?
The AAII Sentiment Survey shows bearish sentiment at 60.6%, a rare level historically.
The last time we saw this was September 2022—stocks surged after.
Past occurrences have preceded strong forward returns over 3, 6, and 12 months.
Fear is at extremes—previous spikes coincided with major buying opportunities.
Average 12-month return after >60% bearish readings → +27.9%.
Investor Takeaway
Historically, extreme bearish sentiment has been a contrarian indicator. This data suggests investors are overly fearful, which often creates opportunity.
Data #2
$7 Trillion in Money Markets
What’s Happening?
Cash in money market funds remains near record highs—at $7 trillion.
Investors haven’t redeployed cash into risk assets, despite equity strength.
Historically, when cash levels are this high, it fuels equity rallies as investors shift back into stocks.
Rate cuts ahead? The Fed could still ease policy later in 2025, supporting risk-on flows.
Cash sitting idle is dry powder—historically, major stock rallies begin when liquidity is high.
Investor Takeaway
This remains one of the biggest sources of potential upside for markets. Once investors start reallocating, markets could get another strong leg higher.
Data #3
Consumer Discretionary vs. Staples Rotation—Driven by Economic Fear
What’s Happening?
The S&P Consumer Discretionary vs. Staples ratio has dropped to levels typically seen in bear markets, but this is happening within a bull market.
Investors are hiding in Staples—but economic data doesn’t justify it.
The last time this ratio hit these levels? The market bottomed and discretionary outperformed.
Corporate earnings suggest businesses are healthy, making this a potential mispricing.
Investor Takeaway
This looks fear-driven, not fundamentally justified.
The economy is in a solid position—employment remains healthy enough, consumer spending is holding up, and corporations just finished an earnings season that showed stable margins and revenue growth.
Historically, discretionary vs. staples rotations like this tend to reverse when the economic outlook stabilizes.
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