AAII Sentiment Survey: Optimism Rebounds to a Six-Week High


Optimism among individual investors about the short-term direction of the stock market is at a six-week high, according to the latest AAII Sentiment Survey. The rebound is occurring as neutral sentiment is at a seven-week low. Pessimism, however, is essentially unchanged from a week ago and remains above its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 5.4 percentage points to 38.5%. Optimism was last higher on January 11, 2017 (43.6%). The rise puts bullish sentiment even with its historical average of 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 5.3 percentage points to 29.2%. Neutral sentiment was last lower on January 4, 2017 (28.6%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, is 32.3%—a decline of just 0.1 percentage points. Pessimism remains above its historical average of 30.5% for the fifth time in six weeks.

Though bullish sentiment had been below average over the five previous weeks, it was never unusually low. Rather, optimism had merely fluctuated within the lower half of its typical range before rebounding to back to its historical average this week.

This week’s rebound in optimism comes as both large- and small-cap stocks rose to new record highs. Not all individual investors are encouraged by the continued rally, however, with some worrying about valuations or a forthcoming pullback.

The potential impact that President Trump could have on the domestic and global economy continues to cause uncertainty or concern among some investors, though encouraging others. Also influencing investor sentiment are earnings, consumer sentiment and the magnitude and timing of future interest rate increases.

This week’s AAII Sentiment Survey results:

  • Bullish: 38.5%, up 5.4 percentage points
  • Neutral: 29.2%, down 5.3 percentage points
  • Bearish: 32.3%, down 0.1 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.).

Want to weigh in? Take the survey yourself and see results online at http://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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