The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly voting frame.
Data represents what direction members feel the stock market will be in the next 6 months.
AAII Investor Sentiment Survey Update
This week’s Sentiment Survey results:
Optimism among individual participants rose to its highest mark and pessimism fell to its lowest level since February, according to the latest AAII Sentiment Survey. Neutral sentiment continued above its historical average.
Expectations that stock prices will rise over the next 6 months, rose 5.6 percentage points to 40.4%. This is the 1st time optimism has been above 40% since 26 February 2015 (45.4%). This week’s rise ends a record 33-week run of Bullish sentiment readings that were below the historical average of 39.0%.
Expectations that stock prices will stay essentially unchanged over the next 6 months, pulled back by 2.2 percentage points to 39.0%. Neutral sentiment remains above its historical average of 31.0% for the 7th week running and the 41st week this year.
Expectations that stock prices will fall over the next 6 months, fell 3.4 percentage points to 20.6%. Pessimism was last lower on 26 February 2015 (20.3%). The historical average is 30.0%. This week’s decline puts Bearish sentiment at the bottom of its typical range.
Since rising to 39.9% on 30 September 2015, as the S&P 500 retested its August lows, pessimism has fallen by a cumulative 19.3 percentage points. Optimism, conversely, has only risen by 12.3 percentage points over the same period and has shown greater W-W variance. Pessimism has declined for 4 straight weeks. The shift has occurred as the S&P 500 has rebounded and is now nearing its pre-correction marks.
In addition to market trends, short-term sentiment among AAII members is impacted by global and international events, particularly China and global economic weakness, US monetary policy, US politics and the pace of US economic growth. Q-3 revenues and EPS surprises may also be having an impact.
Charles Rotblut, CFA, AAII Journal
Paul Ebeling, Editor