AAII sentiment update — this is why we follow the

AAII sentiment update — this is why we follow the data, not emotions.

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Last week, AAII looked like risk appetite was improving fast: End of Quarter Mechanics....

6/24:

Bulls 44.9%

Bears 36.1%

Bull-Bear Spread +8.8 pts

That was a strong rebound from the 6/10 fear spike when bears were 47.7% and the spread was -17.3 pts.

But the newest 7/1 print changed the tone:

Bulls fell to 31.4%

Bears jumped to 42.3%

Neutral rose to 26.4%

Bull-Bear Spread flipped back to -10.9 pts

That is a 19.7 point reversal in the spread in one week.

My read:

The July earnings gain window is still open, but this is no longer a clean “straight risk-on” sentiment setup.

Bulls are now back below their historical average of 37.5%, while bears are back above their historical average of 31.0%.

That means the market has room to rally if earnings, CPI/PPI, oil, and liquidity cooperate — but positioning is still cautious and fragile.

This is actually useful.

It tells me not to chase blindly.

The best setup is still selective:

Strong names.

Clean support holds.

Improving money flow.

Catalysts ahead.

Defined risk.

July can still work, but we need confirmation from price, breadth, earnings, and inflation data.

Sentiment cooled hard.

Now we let the market prove whether this is fear to buy — or a warning to respect.

Stay tactical.

Follow the data.

Don’t marry the bias.

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