Optimism among individual investors about the short-term direction of the stock market remained above its long-term average for the sixth consecutive week, according to the latest AAII Sentiment Survey. This is the longest such streak since early January. Neutral sentiment also rose this week, while pessimism declined.
Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 1.9 percentage points to 42.2%. The last time bullish sentiment stayed above its historical average of 39.0% for a longer period of time was a seven-week stretch between November 28, 2013 and January 9, 2014.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.8 percentage points to 34.8%. This is the third consecutive week and the 35th out of the past 37 weeks with a neutral sentiment reading above its historical average of 30.5%.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell by 3.6 points to 23.0%. The drop keeps pessimism below its historical average of 30.5% for the 43rd time in the past 49 weeks.
Keeping many individual investors optimistic about the short-term direction of stock prices is the S&P 500’s overall upward momentum, earnings growth, sustained economic expansion and the Federal Reserve’s tapering of bond purchases. Causing other AAII members to be pessimistic are prevailing valuations, the failure of the S&P 500 to set new highs, events in the Middle East and Ukraine, the pace of economic growth and Washington politics.
This week’s AAII Sentiment Survey results:
- Bullish: 42.2%, up 1.9 percentage points
- Neutral: 34.8%, up 1.8 percentage points
- Bearish: 23.0%, down 3.6 percentage points
- Bullish: 39.0%
- Neutral: 30.5%
- Bearish: 30.5%
The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.