AAII Sentiment Survey: Optimism Pulls Back, Stays Above Average

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Optimism among individual investors about the short-term direction of the stock market pulled back, but remains above its historical average (albeit barely so) in the latest AAII Sentiment Survey. Meanwhile, pessimism rebounded and neutral sentiment rose.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.1 percentage points to 38.7%. Optimism is above its historical average of 38.5% for the fourth time in five weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.6 percentage points to 35.1%. Neutral sentiment remains above its historical average of 31.0% for the 18th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 4.5 percentage points to 26.2%. Even with the increase, pessimism remains below its historical average of 30.5% for the 10th consecutive week and the 24th time out of the past 28 weeks.

This week’s rebound puts bearish sentiment back into its recent 1.5 percentage-point range. Pessimism has fluctuated between 25.2% and 26.7% during six out of the past nine weeks.

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

The recent record highs for the Nasdaq composite and the Russell 2000 index are helping to keep optimism above where it was over the past few months. Nonetheless, 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: 38.7%, down 6.1 percentage points
  • Neutral: 35.1%, up 1.6 percentage points
  • Bearish: 26.2%, up 4.5 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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