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AAII Sentiment Survey: Neutral Sentiment Rises to a Three-Month High

The percentage of individual investors describing their short-term outlook for stocks as “neutral” is at its highest level in three months. The latest AAII Sentiment Survey also shows a decline in optimism and a small increase in pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 3.9 percentage points to 44.7%. Even with the decline, optimism remains above its historical average of 38.5% for the 10th time in 11 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.5 percentage points to 32.6%. Neutral sentiment was last higher on November 23, 2017 (35.5%). The increase puts neutral sentiment above its historical average of 31.0% for the first time in 12 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 1.4 percentage points to 22.8%. Pessimism remains below its historical average of 30.5% for the 10th time in 11 weeks.

At current levels, all three indicators are within their typical historical ranges.

Many individual investors are watching interest rates, monetary policy and bond yields. (Most of this week’s results were tabulated before the minutes from the February Federal Open Market Committee meeting were released.) Earnings growth also remains at the forefront of AAII member’s minds. Tax cuts are giving some individual investors reason to be optimistic, while others are uncertain or skeptical about the impact that the new law will have on growth. Also influencing sentiment are politics and valuations.

This week’s AAII Sentiment Survey results:

  • Bullish: 44.7%, down 3.9 percentage points
  • Neutral: 32.6%, up 2.5 percentage points
  • Bearish: 22.8%, up 1.4 percentage points

Historical averages:

  • 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.). The survey and its results are available online at: www.aaii.com/sentimentsurvey.

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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