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AAII Sentiment Survey: Pessimism Dips Back Below Average

Pessimism among individual investors about the short-term direction of the stock market dipped back below its historical average in the latest AAII Sentiment Survey. Neutral sentiment rebounded, while optimism was nearly unchanged.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined by a slight 0.2 percentage points to 36.2%. Optimism remains below its historical average of 38.5% for the seventh time in eight weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.1 percentage points to 34.8%. The rise keeps neutral sentiment above its historical average of 31.0% for the 25th time in 26 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 2.0 percentage points to 29.1%. The historical average is 30.5%.

Pessimism was above average for two consecutive weeks prior to this week’s drop. We point this out because it has been approximately a year since bearish sentiment was above its historical average for a span of more than three consecutive weeks. Pessimism ranged between 32.1% and 39.9% during the six-week period of August 3, 2017, through September 7, 2017.

At current levels, all three indicators are well within their typical historical ranges.

Tariffs, and the possibility of a trade war, remain front and center on the minds of many individual investors. Also influencing sentiment are Washington politics (including President Donald Trump), economic growth, interest rates (including monetary policy), valuations and corporate profits.

This week’s AAII Sentiment Survey results:

  • Bullish: 36.2%, down 0.2 percentage points
  • Neutral: 34.8%, up 2.1 percentage points
  • Bearish: 29.1%, down 2.0 percentage points

Historical averages:

  • 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.

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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