As February 2018 winds down, stock investors don’t seem to be panicking over the price gyrations and higher volatility experienced earlier in the month.
It has been a while since investors have dealt with such choppy markets, in my view.
At one point this month, the Dow Jones Industrial Average fell more than 1,500 points during a single session.
That said, the Dow and S&P 500 Index are up about 1% for the year as of February 22.
In my view, investors are far less bullish about stocks than at the start of the year.
In January, roughly 60% of investors were bullish on stocks, according to the AAII Sentiment Survey.
That has since fallen to 44.7%.
However, bullish sentiment remains above the historical average of 38.5%.
In my opinion, investors were far too optimistic early in the year as valuations climbed to unsustainable levels.
I think investors now seem more cool-headed, but are still optimistic in historical terms.
In my view, investors don’t seem to be panicking about higher volatility or the recent technical correction.
Furthermore, that wasn’t the first 10%-plus correction in the current bull market. We experienced the fifth technical correction in a stock rally that’s up nearly 300% since March of 2009.
In my opinion, investors seem to be taking that lesson on board based on the sentiment data.