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AAII Sentiment Survey: Investor sentiment turns slightly bullish

Individual investor sentiment turns slightly bullish about the near-term outlook for stocks in the latest AAII Sentiment Survey.
Bullish sentiment, expectations that stock prices will rise over the next six months, increased 3.4 percentage points to 36.5%. Bullish sentiment remains below its long-term average of 39%, even with its slight upward bump. Bullish sentiment has been below its long-term average for 23 of the last 24 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 3.4 percentage points to 30.5%. Neutral sentiment fell just below its long-term average for the first time in seven weeks. The historical neutral average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged down 0.1 percentage points to 33.0%. While bearish sentiment is slightly above its historical average of 30%, it has been generally trending down as the market has climbed its “wall of worry.”

This week’s special question asked AAII members which industries or sectors they currently liked. The largest percentage of AAII members favored the energy sector, with 18% of responses selecting energy. The health care sector had the second highest response rate, with 13% of AAII members selecting this segment. Ten percent of our members favored both commodities (metals) and technology. Two percent of our members indicated that they were on the sidelines, holding cash.
A few of our members looked beyond industries or sectors when answering the question and indicated they currently favored dividend-paying stocks (6%), emerging markets (2%) or contrarian strategies (2%).

Here is a sampling of the responses:

18% Energy
13% Health Care
10% Commodities (Metals)
10% Technology
7% Financial
7% Real Estate
6% Capital Goods
5% Consumer Staples
5% Retail
4% Utilities
2% Agriculture
2% Telecommunications
6% Dividend-Paying Stocks
2% Emerging Markets
2% Contrarian Strategies
2% Cash

This week’s AAII Sentiment Survey results:
Bullish: 36.5%, up 3.4 percentage points
Neutral: 30.5%, down 3.4 percentage points
Bearish: 33.0%, down 0.1 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

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.