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AAII Sentiment Survey: Individual Investors Remain Optimistic

Individual investors continue to be optimistic about the short-term direction of stock prices, according to the latest AAII Sentiment Survey. Bullish sentiment rose, while bearish sentiment fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 5.1 percentage points to 46.1%. The rise keeps optimism above its historical average of 39.0% for the 21st time in 23 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.1 percentage points to 32.4%. The increase keeps neutral sentiment above its historical average of 30.5% for a second consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped by 6.2 percentage points to 21.5%. This is the 13th consecutive week that pessimism is below its historical average of 30.5%. At current levels, bearish sentiment is near the bottom of its typical range.

Individual investors remain optimistic about the short-term direction of stock prices even with the modest decline the S&P 500 has experienced so far this month. This said, bullish sentiment remains below the unusually high levels registered two weeks ago.

Keeping AAII members encouraged is the overall upward momentum of stock prices, falling energy prices, earnings growth and sustained economic expansion. Causing other members to be cautious or pessimistic are geopolitical events, the impact of falling oil prices on energy stocks, a sense that prevailing valuations for other stocks are too high, the pace of economic growth and worries that an even larger decline in stock prices could occur.

This week’s AAII Sentiment Survey results:

  • Bullish: 46.1%; up 5.1 percentage points
  • Neutral: 32.4%; up 1.1 percentage points
  • Bearish: 21.5%; down 6.2 percentage points

Historical averages:

  • 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.

 

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