There are many different ways to measure investor confidence and market sentiment.BoA Merrill Lynch looks at their client flows relative to the market. Some of this is instructive:
On the one hand, private clients were net sellers in four of the last five weeks. However, as the chart shows above, there is a possible rotation starting away from Defensives and towards Cyclicals. That move might suggest that sentiment is improving.
One caveat: It is easy to cherry pick what you want when it comes to investor sentiment. This has a bullish color to it, but there are lots of other bearish readings as well.
BofA Merrill Lynch’s Equity Client Flow Trends
Savita Subramanian, Dan Suzuki, Alex Makedon, Jill Carey
Equity and Quant Strategy
Bank of America Merrill Lynch, April 30, 2013