‘Buy Stocks’ Spikes in Google Search, but Sentiment Still Shows a Bearish Slant - Barron's

Are investors starting to shop for stocks? Google searches offer one hint.

Photograph by Scott Barbour/Getty Images

Stocks have tumbled since mid-February, as the human and economic impacts of the novel coronavirus pandemic became very real, very fast. Many companies’ earnings will be slashed and others will be at risk of insolvency. But the indiscriminate selloff has also created plenty of buying opportunities for shares of quality companies now available at a discount.

Individual investors seem eager to take advantage. In the past two weeks, Google searches for “buy stocks” have spiked as much as 10 times the average week in recent months. The Dow Jones Industrial Average had its best week of gains since 1938 last week, just as interest in getting back into the market appears to have picked up.

Google searches for other terms, including “unemployment,” “work from home” and “delivery” have also risen sharply in recent weeks, according to data from Google Trends.

Many of the increased “buy stocks” searches could be purely informational in nature, and don’t necessarily indicate that investors are acting on that interest. Another recent measure of individual investor sentiment, the American Association of Individual Investors’ weekly poll, shows a bearish slant.

The AAII’s most recent survey was conducted last Wednesday. It showed 52% of respondents identifying as bearish—about equal with a week earlier. RBC Capital Markets’ head of U.S. equity strategy, Lori Calvasina, still sees individual investor sentiment becoming more bearish before it bottoms out.

“There is still room for sentiment in this camp to deteriorate,” she wrote in a report on Thursday. “Bears increased only very slightly last week and are tracking at 52% (up from 51%). While this is up a notch from the 39% level in place a few weeks ago, it is still well below the all-time high seen in the Financial Crisis of 70%. We continue to think it is premature to declare the process of investor capitulation complete.”

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For a gauge of institutional investor sentiment, Calvasina watches positioning in U.S. equity futures based on data from the Commodity Futures Trading Commission. That showed asset managers becoming much more negative on the market for four straight weeks since mid-February, when it was at its most euphoric level ever.

The data for last week showed institutional investors getting slightly more positive on the market, thanks to more-bullish positioning in futures tied to the Nasdaq Composite and Russell 2000 indexes, but more bearish on the Dow and the S&P 500.

“It is difficult to know whether this was the beginning of a more meaningful re-engagement or simply a pause in the selling,” Calvasina wrote on Monday. “We lean towards the latter.”

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com

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‘Buy Stocks’ Spikes in Google Search, but Sentiment Still Shows a Bearish Slant - Barron's
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