Optimism surged to its third-highest level of the year in the latest AAII Sentiment Survey. At the same time, pessimism fell to a 17-month low.
Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 12.0 percentage points to 41.3%. Optimism was last higher on January 11, 2017 (43.6%). This is the first time in 29 weeks and only the second time in the past 35 weeks that bullish sentiment is above its historical average of 38.5%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.8 percentage points to 36.7%. Neutral sentiment was last higher on July 26, 2017 (41.2%). This is the 20th consecutive week and the 25th time out of the last 26 weeks with a neutral sentiment reading above its historical average of 31.0%.
Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 13.8 percentage points to 22.0%. Pessimism was last lower on April 6, 2016 (21.5%). The drop ends a streak of six consecutive weeks with bearish sentiment above its historical average of 30.5%.
At current levels, bullish sentiment remains close to its historical levels. Pessimism, though low, is also within its typical range.
The big shifts in optimism and pessimism occurred as the Dow Jones industrial average, the S&P 500 and the Nasdaq all set new record highs. The alleviation of fears about the possibility of a larger summer drop in stock prices may be playing a role in this week’s results.
Political drama in Washington remains at the forefront of many individual investors’ minds. Though the August pullback has been reversed, concerns about a larger pullback still exist among some investors. Others, however, are encouraged by continuing economic and earnings growth.
This week’s AAII Sentiment Survey results:
- Bullish: 41.3%, up 12.0 percentage points
- Neutral: 36.7%, up 1.8 percentage points
- Bearish: 22.0%, down 13.8 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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