The percentage of individual investors describing their short-term outlook for stocks as “neutral” is at its highest level in nine weeks. The latest AAII Sentiment Survey also shows a drop in optimism and an increase in pessimism.
Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.8 percentage points to 33.3%. The decline puts optimism back below its historical average of 38.5% for the 34th time this year.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 5.3 percentage points to 37.9%. Neutral sentiment was last higher on July 26, 2017 (41.2%). This is the 22nd consecutive week that neutral sentiment is above its historical average of 31.0%.
Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.5 percentage points to 28.7%. The increase was not large enough to prevent pessimism from staying below its long-term historical average of 30.5% for a third consecutive week.
The drop in optimism follows what had been the first back-to-back weeks of above-average bullish sentiment since January. This week’s changes bring optimism and neutral sentiment back to levels more typical of what we’ve seen throughout this calendar year.
Political drama in Washington remains at the forefront of many individual investors’ minds. Valuations are also playing a role, creating concern among some about stocks being overpriced and potentially leading to a drop in stock prices. Others, however, are encouraged by continuing economic and earnings growth.
This week’s AAII Sentiment Survey results:
- Bullish: 33.3%, down 6.8 percentage points
- Neutral: 37.9%, up 5.3 percentage points
- Bearish: 28.7%, up 1.5 percentage points
- 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.
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