Optimism is below its historical average of 39.0% for a 29th week in a row in the latest AAII Sentiment Survey, tying a 22-year record. Neutral sentiment rose to a five-week high, while pessimism declined to a nine-week low.
Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.1 percentage points to 32.1%. As stated above, the downward move keeps bullish sentiment below its historical average of 39.0% for the 29th consecutive week. The only other time bullish sentiment remained below 39.0% for this length of time was April 2 through October 15, 1993.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.6 percentage points to 39.2%. Neutral sentiment was last higher on August 20, 2015 (39.9%). The historical average is 31.0%.
Bearish sentiment, expectations that stock prices will fall over the next six months, edged down 0.4 percentage points to 28.7%. This is the lowest level of pessimism registered by our survey since July 23, 2015 (25.6%). The historical average is 30.0%.
Optimism about the six-month direction of stock prices continues to be low among individual investors. Since mid-March, less than a third of surveyed AAII members have described themselves as bullish during most weeks. Valuations, the slow pace of economic and unimpressive earnings growth as well as concerns about the possibility of a decline in stock prices occurring have all kept optimism below its historical average. Though the late-August correction has reduced valuations, all of the aforementioned concerns continue to impact individual investors’ outlook for stock prices.
This week’s AAII Sentiment Survey results:
Bullish: 32.1%, down 1.1 percentage points
Neutral: 39.2%, up 1.6 percentage points
Bearish: 28.7%, down 0.4 percentage points
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.