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AAII Sentiment Survey: Neutral Sentiment Rebounds Strongly

The percentage of individual investors describing their short-term outlook for stock prices as “neutral” rebounded strongly in the latest AAII Sentiment Survey. Optimism pulled back, as did pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 8.4 percentage points to 34.7%. The drop puts optimism back below its historical average of 38.5% for the third time in four weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped by 12.6 percentage points to 40.4%. Neutral sentiment was last higher on May 16, 2018 (42.7%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell by 4.2 percentage points to 24.9%. This is a five-week low. Pessimism is below its historical average of 30.5% for the 12th time in the past 14 weeks.

At its current level, neutral sentiment is back at an unusually high level, albeit barely so. The cutoff between a typical and unusually high reading is 40.0% (one standard deviation above average).

Many—but not all—individual investors anticipate continued volatility and/or think that the current political backdrop could have a further impact on the stock market. Trade policy is influencing some individual investors’ sentiment as well. While many approve of the Federal Reserve’s plan to continue gradually raising interest rates, some AAII members are concerned about the impact that rising rates will have. Also influencing sentiment are valuations, tax cuts, earnings growth and economic growth.

This week’s AAII Sentiment Survey results:

  • Bullish: 34.7%, down 8.4 percentage points
  • Neutral: 40.4%, up 12.6 percentage points
  • Bearish: 24.9%, down 4.2 percentage points

Historical averages:

  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

Want to weigh in? Take the survey yourself and see results online at 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

 

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