Unsure of Market Direction? Try These Sentiment Indicators

• The VIX has stayed below 20 since April 8, 2026; historically, after the VIX's 20-day average drops below 20 following an extended period above it, the S&P 500 has averaged only 0.42% six-month returns (versus 4.43% normally)
• Sentiment indicators show relatively neutral readings: AAII bull percentile at 54% and bear at 65%, while Investors Intelligence reports 47.3% bulls and 23.6% bears among advisors
• CNN's Fear & Greed Index has shown consistent elevated greed levels since April 2026, with a notably sharp rise at the start of spring raising concerns about rapid sentiment shifts

Market Sentiment Analysis Shows Mixed Signals Amid Record Highs

Key Sentiment Indicators Overview:

Schaeffers Research analyzed multiple sentiment indicators as of May 19, 2026, revealing uncertain market direction despite major indexes approaching record highs. The analysis focuses on the C.A.I.V.O.S. index, which aggregates key Wall Street sentiment metrics.

Current Readings:

• CNN Fear & Greed Index: Shows elevated greed levels with consistent readings since April, following a sharp spring rally
• AAII Survey: Bull percentile at 54%, bear percentile at 65% - relatively neutral positioning with no extreme readings
• Investors Intelligence Poll: Bulls declined 2.7% to 47.3%, bears increased 2.5% to 23.6%, with 29.1% expecting corrections. All metrics remain near long-term averages

VIX Analysis - Critical Warning Signal:

The Cboe Volatility Index has remained below 20 since April 8, 2026, following a month-long period above that threshold. Historical data from 1997 shows concerning patterns when the VIX's 20-day average transitions from above to below 20:

• S&P 500 averaged just 0.42% returns six months post-signal versus typical 4.43%
• Success rate dropped to 62% positive versus normal 72%
• Pattern remains bearish even when markets are near all-time highs

Market Context:

While semiconductor stocks show 1999-style exuberance and indexes push toward records, persistent inflation concerns and geopolitical tensions create conflicting signals. The analysis suggests cautious positioning despite surface-level bullishness, with the VIX pattern indicating potential underperformance ahead.