AAII Sentiment Survey: Bullish Sentiment Below Average for 15th Week

Bullish sentiment declined, extending its streak of consecutive below-average readings, in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 2.4 percentage points to 30.2%. This is the 15th consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.0 percentage points to 35.0%. This is a 10-week high for neutral sentiment.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.4 percentage points to 34.7%. This is the 10th consecutive week and the 13th out of the last 14 weeks that bearish sentiment has been above its historical average of 30%.

This is the longest streak of consecutive below-average bullish readings since a 29-week period that ran from April 2, 1993, until October 15, 1993. Typically, periods of below average optimism have been interrupted by one or two weeks of above-average bullish sentiment. This has not been the case during the current streak.

AAII members remained worried about the pace of global economic growth and the ongoing sovereign debt crisis in Europe. Also fraying their nerves is the ongoing volatility in stock prices.

This week’s special question asked AAII members about their expectations for second-quarter earnings. Responses were mixed, with the largest number of respondents bracing for disappointing results, marked by declines in profits. The next-largest group thought earnings would be in line with expectations and not show much year-over-year growth. The third-largest group is optimistic that profits grew last quarter.

This week’s AAII Sentiment Survey results:

Bullish: 30.2%, down 2.4 percentage points
Neutral: 35.0%, up 1.0 percentage points
Bearish: 34.7%, up 1.4 percentage points

Historical averages:

Bullish: 39%
Neutral: 31%
Bearish: 30%

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?a=blog