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S&P 500: Investors are the most bearish since 2007

Despite the S&P 500 approaching bull market territory, investors are the most bearish they’ve been since 2007. Yahoo Finance's Josh Schafer takes a look at the market movement.

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BRAD SMITH: Well, the S&P 500 is approaching bull market territory, but that doesn't mean everyone is betting on the index to rise higher. Our markets reporter Josh Schafer is here with an outlook on the S&P 500. So Josh, what you got for us?

JOSH SCHAFER: Yeah, Brad. So what I've brought with me here today-- we've got a fancy chart over here, right? Let's take a look at this chart from Bespoke Investment. And what you're looking at is speculative investment-- speculative bets on what the S&P 500 will do in the future, right? This is bets on futures. And investors are largely short on the S&P 500 at their highest level since 2007.

So you can see that here that's been that downward trend you're seeing there. A lot, of course, people worried about essentially the narrow breadth we've seen in the S&P 500. A lot of tech stocks have driven that up. Basically seven stocks are what people have been following such as NVIDIA driving that run up that we've seen in the S&P 500.

Morgan Stanley out with a note yesterday saying that they believe that maybe Fed-- that lagging policy, those impacts could eventually hurt earnings in the second half of the year. They see earnings declining 16% to end the year. We should note that is largely in the minority of what we've been seeing.

We've seen actually several upgrades to S&P 500 targets which, Julie, I know you wrote about this morning in our Morning Brief. And that's what's interesting when you take a look at another chart from Bespoke. So I want to show you a second chart here that shows what happens when we do enter a bull market.

And what's interesting here is you can see it's actually normally choppy in the very beginning. But historically, over that next three to six-month period, you see the S&P 500 take off pretty significantly. So this is sort of if we were to enter this bull market, if we do end up hitting that this week, if we hit it in the next coming weeks-- of course, we could always fall down and never hit it. But if we were to hit it, it's interesting to see that you see that chop through about the first 30 days there. And then, historically, on average, it does take off.

One other thing that I found interesting from this Bespoke note, guys, was this is the longest it has taken for us to enter a bull market since about the 1950s-- the late 1950s. It's been 162 days we've been sort of on this slow, slow track up, and that's historically pretty slow compared to what we've seen.

JULIE HYMAN: Yes, this is old in bear market terms, I guess.

JOSH SCHAFER: Yeah.

JULIE HYMAN: Thanks, Josh. Appreciate it.