Optimism among individual investors about the short-term direction of stock prices is above average for just the second time in nine weeks. The latest AAII Sentiment Survey also shows slightly lower neutral sentiment and pessimism holding above its historical average despite a decline.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.4 percentage points to 41.3%. This is a five-week high. The historical is average 38.5%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by a marginal 0.1 percentage points to 27.5%. The decrease keeps neutral sentiment below its historical average of 31.0% for the second consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.3 percentage points to 31.2%. The drop was not steep enough to prevent pessimism from remaining above its historical average of 30.5% for the eighth time in nine weeks.
This is the first time that neutral sentiment has stayed below average on consecutive weeks since mid-February. Over the same 38-week stretch, bullish sentiment has been above average just 11 times and bearish sentiment has been above average just 15 times.
At current levels, all three indicators are within their typical ranges.
Due to the timing of when our survey period runs (Thursday through Wednesday), the majority of this week’s results were recorded before Tuesday’s election results were known.
The recent rebound in the major indexes may have given some individual investors encouragement that a short-term bottom in the stock market has been set. Tariffs and the possibility of an escalating trade war remain front and center in the minds of many individual investors. Also influencing sentiment is Washington politics (including President Donald Trump), midterm elections, economic growth, valuations and corporate profits.
This week’s AAII Sentiment Survey results:
- Bullish: 41.3%, up 3.4 percentage points
- Neutral: 27.5%, down 0.1 percentage points
- Bearish: 31.2%, down 3.3 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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