We have a buy signal on AAII sentiment. Bearish retail sentiment often offers contrarian signals to enter the market and as the top two chart shows there are very few bears at the moment according to the AAII survey. This argues for a short term bounce.

However, despite the prevalence of short-term bears, cash allocation amongst retail investors is still near record lows (bottom chart). This does not bode well for the medium term market outlook.

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