E*TRADE Study Reveals While Majority Bullish, Sentiment Slid from Q1 Peaks

While investors still believe the market may have steam left, bearishness has increased gradually for the past two quarters

NEW YORK--()--E*TRADE Financial Corporation (NASDAQ:ETFC) today announced results from the most recent wave of StreetWise, E*TRADE’s quarterly tracking study of experienced investors. Results indicate that while many believe the market still has room to run, bullish sentiment continued a gradual decline from Q1’17 highs:

  • The majority remain bullish at 60 percent, yet this view has decreased three percentage points from Q2’17 and five percentage points from Q1’171 highs.
  • Slightly more than three out of five investors believe the market will rise five percent or more this quarter, up six percentage points from Q2’17.
  • Slightly less than three out of five investors believe the U.S. economy is healthy enough for additional rate hikes, down four percentage points from the previous quarter.

“The market delivered solid returns in the first half of 2017, but savvy investors know the bull ride can’t last forever,” commented Mike Loewengart, VP of Investment Strategy at E*TRADE Financial. “Amid higher valuations, further Fed action anticipated, and significant geopolitical uncertainty, market observers may be viewing the second half of the year with a dose of healthy skepticism. Some will undoubtedly seek defensive plays.”

The survey also explored sentiment concerning potential investment opportunities for the third quarter. Mr. Loewengart offered insight into those identified:

  • International equities. After lagging for much of the past decade, interest in foreign assets gained momentum as developed and emerging market equities have largely outpaced their U.S. counterparts in 2017.
  • Energy. Investors believe energy offers the most potential this quarter. They may be drawn to its defensive characteristics, coupled with the sector’s potential as a value play given the decline it experienced throughout 2017.
  • Information technology. Investor interest in IT remained steady from the previous quarter, despite suffering from a June sell-off. Since the sector has still performed well over the year, investors may be taking a longer view and seeing the recent dip as a buying opportunity.

1. E*TRADE. (2017). E*TRADE Study Reveals Retail Bulls Are Charging into the New Year.

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About the Survey

This wave of the survey was conducted from July 1 to July 10 of 2017 among an online U.S. sample of 959 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±3.16 percent at the 95 percent confidence level. It was fielded and administered by Research Now. The panel is broken into thirds of active (trade more than once a week), swing (trade less than once a week but more than once a month), and passive (trade less than once a month). The panel is 60 percent male and 40 percent female with an even distribution across online brokerages, geographic regions, and age bands.

Referenced Data

When it comes to the current market are you?
      Q3’17   Q2’17   Q1’17   Q4’16   Q3’16
Bullish 60% 63% 65% 55% 55%
Bearish       40%   37%   35%   45%   45%
How do you predict the market will end this quarter?
Q3’17 Q2’17 Q1’17 Q4’16 Q3’16
Rise 61% 55% 60% 54% 41%
Rise 20% 1% 0% 1% 1% 1%
Rise 15% 3% 4% 3% 2% 1%
Rise 10% 14% 13% 13% 8% 5%
Rise 5% 43% 38% 43% 44% 34%
Stay basically where it is 21% 23% 18% 22% 28%
Drop 5% 13% 16% 17% 19% 24%
Drop 10% 4% 4% 4% 4% 6%
Drop 15% 0% 2% 1% 1% 1%
Drop 20% 1% 0% 0% 0% 0%
Drop       18%   22%   22%   24%   31%
Is the U.S. economy healthy enough for the Fed to enact additional rate hikes?
Q3’17 Q2’17 Q1’17 Q4’16 Q3’16
Agree (Top 2 Box) 58% 62% 63% 53% 33%
Strongly agree 14% 16% 15% 12% 6%
Somewhat agree 44% 46% 48% 41% 27%
Neither agree nor disagree 24% 26% 23% 27% 30%
Somewhat disagree 15% 10% 12% 15% 28%
Strongly disagree 3% 2% 2% 5% 9%
Disagree (Bottom 2 Box)       18%   12%   14%   20%   37%
The health of the markets outside the U.S. appeals to me as an investor this quarter.
Q3’17 Q2’17 Q1’17 Q4’16 Q3’16
Agree (Top 2 Box) 53% 50% 43% 40% 33%
Strongly agree 14% 12% 10% 12% 8%
Somewhat agree 39% 38% 33% 28% 25%
Neither agree nor disagree 29% 29% 28% 28% 21%
Somewhat disagree 14% 16% 24% 25% 31%
Strongly disagree 4% 5% 5% 7% 15%
Disagree (Bottom 2 Box)       18%   21%   29%   32%   46%
What industries do you think offer the most potential this quarter? (Top three)
Q3'17 Q2'17 Q1'17 Q4'16 Q3'16
Energy 46% 45% 53% 46% 43%
Information technology 45% 46% 34% 50% 44%
Financials 43% 39% 46% 32% 25%
Health care 41% 39% 42% 45% 54%
Utilities 24% 23% 22% 25% 31%
Industrials 24% 28% 29% 17% 16%
Telecommunication services 24% 24% 19% 27% 26%
Materials 20% 20% 20% 14% 16%
Consumer staples 20% 20% 18% 27% 30%
Consumer discretionary       16%   15% 16%   17%   15%

About E*TRADE Financial and Important Notices

E*TRADE Financial and its subsidiaries provide financial services including online brokerage and banking products and services to retail customers. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC) and OptionsHouse (Member FINRA/SIPC/NFA). Managed Account Solutions are offered through E*TRADE Capital Management, LLC, a Registered Investment Adviser. Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. More information is available at www.etrade.com.

The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results.

E*TRADE Financial, E*TRADE, the E*TRADE logo, and OptionsHouse are trademarks or registered trademarks of E*TRADE Financial Corporation. ETFC-G

© 2017 E*TRADE Financial Corporation. All rights reserved.

E*TRADE Financial Corporation and Research Now are separate companies that are not affiliated. E*TRADE Financial Corporation engages Research Now to program, field, and tabulate the study.

About Research Now

Research Now Group, Inc. is a global leader in digital research data for better insights and business decisions. The company provides world-class research data solutions that enable better decisions and better results for its 3,000 market research, consulting, media, and corporate clients through access to over 11 million deeply profiled business professionals and consumers in more than 40 countries. Research Now operates globally with locations in the Americas, Europe, the Middle East, and Asia-Pacific, and is recognized as the quality, scale, and customer satisfaction leader in the market research industry. For more information, please go to www.researchnow.com.


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