A January survey of investors with at least $1 million in a self-directed brokerage account indicates that wealthy Americans with money in the market remain on the defensive and don't have confidence a market bottom has been reached. Arterra | Universal Images Group | Getty Images

Although January has gotten off to a strong start for the stock market, there's not a lot of confidence the market bottom has been reached, according to a survey of wealthy investors conducted this month by E-Trade Financial and provided exclusively to CNBC. Recent trading patterns have contributed to renewed market optimism with headlines that the U.S. and China are moving closer to resolving their trade differences. The Dow Jones Industrial Average finished with a gain of 336 points on Friday and is up over 13 percent since Christmas Eve, posting its first four-week winning streak since August. Yet despite the rally, there have been big increases in bearishness among investors with at least $1 million in a self-directed brokerage account. They are much more likely now than they were during the volatile fourth quarter to take the view the U.S. economy is not strong enough for the Fed to raise rates. A rising percentage of these investors even believe we have already entered a recession. They are adjusting their overall asset allocation with defensive moves. When last surveyed by E-Trade, these investors were dealing with heightened November volatility, though nowhere near the extreme dive that was yet to occur in December. At that time, 62 percent of these investors remained bullish. In the January survey, that fell to 44 percent, with a majority 56 percent describing themselves as bearish when it comes to the current market. Only 45 percent of these investors believe the market will rise this quarter.

Market sentiment among millionaires Market sentiment Q1 2019 Q4 2018 Rise 45% 59% Stay where it is 19% 18% Fall 36% 23%

The historically conservative health care, utilities and consumer staples sectors are the only ones among the 10 traditional S&P 500 sectors to see significant increases in interest in the first quarter. "They are in preservation mode," said Mike Loewengart, chief investment officer at E-Trade Capital.

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Many investors remain skittish

ETF flows data for the first half of January corroborate the view that investor sentiment is less than bullish on broad stock gains. Equity ETFs saw $3.6 billion of outflows even as stock indexes gained. That compares to $12.7 billion of inflows for fixed income ETFs through the first half of the month, according to DataTrek Research. U.S. equity ETF flows remain negative on the year, with $11 billion in outflows according to XTF.com, despite the outperformance of U.S. stocks. Health care is one of the few ETF sector bets that has experienced meaningful inflows year-to-date. "Health care is traditionally the recession-proof sector," Loewengart said. "Given where we are in the business cycle there has been a consistent uptick in interest in health care. This is what I mean when I talk about 'preservation mode' and becoming more defensive." The 67 percent of wealthy investors who said that health-care stocks offer the best opportunity this quarter is the highest level of confidence expressed for a sector in the past three years of the E-Trade survey. Notably, the previous high reading for health care came in early 2016, at a time when some experts believe the U.S. went through a period that resembled a "mini-recession" and stocks experienced volatility. Between December 2015 and January 2016, the market was down near-7 percent (that downward trend didn't cement, and by March 2016 stocks were on the move up again).

The percentage of investors who described the U.S. as in a recession increased to 17 percent from 7 percent in the first quarter. Now, only 35 percent of these investors believe the U.S. economy is healthy enough for additional Fed rate hikes, down from 69 percent in the fourth quarter of 2018. Investors who believe we are still in what can be described as a "peak" economy fell to 39 percent from 49 percent in January. The situation was described earlier last week by the CEO of the world's largest asset manager, BlackRock CEO Larry Fink, as a "pause" by investors and by the Fed. "I think the Fed talk right now is appropriate. Most Fed governors are talking about it's appropriate to pause. And I, you know, I was surprised when they did their last tightening," Fink said. "And let's step back for a second: investors have a real choice to pause, unlike the last ten years. They can put money in a money market fund, and earn close to 3 percent. That is another reason why we saw outflows and fixed income." Wealthy investors who said they planned to move out of current positions and into cash increased to 15 percent from 12 percent in the January survey. And there was an increase in millionaires nibbling at the market after the huge fourth-quarter decline, with 13 percent saying they plan to move from cash back into market positions, up from 5 percent. Still, the majority remain more hesitant.

Millionaires planning moves Next 6 months Q1 2019 Q4 2018 Out of positions, into cash 15% 12% Out of cash, into new positions 13% 5% Change portfolio allocations 26% 39% Make no changes 44% 43%