Optimism among individual investors about the short-term direction of stock prices is below 30% for the 10th consecutive week in the latest AAII Sentiment Survey. Neutral sentiment rebounded, while pessimism pulled back.
Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 1.0 percentage points to 24.8%. Optimism is below its historical average of 38.5% for the 51st consecutive week and the 84th out of the past 86 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.7 percentage points to 41.2%. The increase follows what had been a four-week low. It also keeps neutral sentiment above its historical average of 31.0% for the 39th consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 3.7 percentage points to 34.1%. Even with the decline, pessimism is above its historical average of 30.5% for the seventh time in nine weeks.
As noted above, the percentage of individual investors describing their short-term outlook as “bullish” has now been below 30% for 10 consecutive weeks. During six of those weeks, optimism has been below 28.0%, the breakpoint between the normal range of readings and unusually low readings. Not surprisingly, the S&P 500 and the Russell 2000 have both declined over this period.
Causing concern for individual investors is the lack of new market highs, the possibility of the stock market experiencing a larger drop, valuations, the November elections, global economic uncertainty and the pace of corporate earnings growth. Giving other individual investors reason for optimism are the perceived lack of investment alternatives, corporate earnings, low/stable energy prices and sustained, albeit slow, economic growth.
This week’s AAII Sentiment Survey results:
- Bullish: 24.8%, up 1.0 percentage points
- Neutral: 41.2%, up 2.7 percentage points
- Bearish: 34.1%, down 3.7 percentage points
- 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.).
Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/sentimentsurvey.
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