All three indicators in the AAII Sentiment Survey remained close to each other for the second consecutive week. Just 1.4 percentage points separate bullish and bearish sentiment, with neutral sentiment in between the two.
Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 0.5 percentage points to 34.2%. The modest increase was not enough to prevent optimism from staying below its historical average of 38.5% for the 25th consecutive week and the 30th time out of the last 31 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by a full percentage point to 33.0%. Even with this week’s pullback, neutral sentiment remains above its historical average of 31.0% for the 16th consecutive week and the 21st time out of the last 22 weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.5 percentage points to 32.8%. Pessimism was last higher on May 17, 2017 (34.3%). The historical average is 30.5%.
Though up by just a cumulative 0.7 percentage points over the past two weeks, bearish sentiment is now 8.5 percentage points above its 2017 low of 24.3%, set on July 26. Pessimism is also above its historical average on three consecutive weeks for the first time since last April.
While some individual investors are encouraged by this year’s record highs for the major indexes, many others have expressed concern about the possibility of a pullback and/or the prevailing level of valuations. The Trump administration remains at the forefront of many investors’ minds and is having a significant impact on sentiment. Other factors playing roles are earnings and interest rates/monetary policy.
This week’s AAII Sentiment Survey results:
- Bullish: 34.2%, up 0.5 percentage points
- Neutral: 33.0%, down 1.0 percentage points
- Bearish: 32.8%, up 0.5 percentage points
- Bullish: 38.5%
- Neutral: 31.0%
- 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.).
Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/sentimentsurvey.
If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership.