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AAII Sentiment Survey: Optimism Rebounds; Pessimism Stays Above Average

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Optimism rebounded back above its historical average after having fallen by 6.8 percentage points between September 18 and October 1. Though bearish sentiment increased ever so slightly (0.1 percentage points), this is just the fourth time in the past 12 months that pessimism is above its historical average on back-to-back weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 4.5 percentage points to 39.9%. This is the eighth week out of the past nine with optimism above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.5 percentage points to 29.1%. The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged up by a mere 0.1 percentage points to 31.0%. The historical average is 30.5%.

Both bullish and bearish sentiment are very close to their historical averages. This is occurring as stocks are experiencing both upward and downward volatility. Keeping some individual investors optimistic are the S&P 500’s overall upward momentum, earnings growth, sustained economic expansion and the Federal Reserve’s tapering of bond purchases. Keeping others cautious are worries about the possibility of a correction, prevailing valuations, geopolitical events, the pace of economic growth and Washington politics.

This week’s AAII Sentiment Survey:

  • Bullish: 39.9%, up 4.5 percentage points
  • Neutral: 29.1%, down 4.5 percentage points
  • Bearish: 31.0%, up 0.1 percentage points​

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • 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: http://www.aaii.com/sentimentsurvey.

 

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