Optimism among individual investors is at its highest level in five months, according to the latest AAII Sentiment Survey. Pessimism fell to a new low for the year, while neutral sentiment is modestly lower.
Bullish sentiment, expectations that stock prices will rise over the next six months, jumped by 5.3 percentage points to 37.4%. Optimism was last higher on November 5, 2015 (39.0%). The increase was not large enough, however, to prevent bullish sentiment from staying below its historical average of 39.0% for the 18th consecutive week and the 51st out of the past 53 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged down 0.5 percentage points to 38.3%. This is the sixth consecutive week and the 58th time in the past 62 weeks with a neutral sentiment reading above its historical average of 31.0%.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell 4.9 percentage points to 24.4%. Pessimism was last lower on December 31, 2015 (23.6%). This is the first time bearish sentiment has been below its historical average of 30.0% on consecutive weeks since a three-week stretch between November 26 and December 10, 2015.
We’re continuing to see the pendulum swing towards the optimistic side. Since February 11, 2015, bullish sentiment has risen by a cumulative 18.2 percentage points and bearish sentiment has fallen by a cumulative 24.3 percentage points. As noted above, however, optimism is still below its historical average.
The improvement in expectations about the short-term direction of the stock market corresponds with the ongoing rebound in the major indexes. Though some individual investors are encouraged by the market’s rebound, sustained economic growth and still comparatively low energy prices, others fret about the pace of economic growth in the U.S., the pace of economic growth in China, tensions in the Middle East, the rate of earnings growth and prevailing valuations. Frustration with Washington politics also continues to be expressed.
This week’s AAII Sentiment Survey results:
- Bullish: 37.4%, up 5.3 percentage points
- Neutral: 38.3%, down 0.5 percentage points
- Bearish: 24.4%, down 4.9 percentage points
- Bullish: 39.0%
- Neutral: 31.0%
- Bearish: 30.0%
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.).
Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/sentimentsurvey.
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