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AAII Sentiment Survey: Pessimism Falls to a 6-Week Low

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sentiment chart 06-09-16

Pessimism about the short-term direction of stocks is at a six-week low, according to the latest AAII Sentiment Survey. Neutral sentiment is higher, while optimism pulled back.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 2.3 percentage points to 27.8%. The decline follows last week’s 12.4-percentage-point jump to a six-week high of 30.2%. This week’s decrease keeps optimism below its historical average of 38.5% for the 31st consecutive week and the 64th out of the past 66 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 3.6 percentage points to 44.3%.  This is the 13th consecutive weekly reading above 40% and the 19th consecutive week that neutral sentiment has been above its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined by 1.2 percentage points to 27.8%. Pessimism was last lower on April 20, 2016 (23.9%). Bearish sentiment has been below its historical average of 30.5% for the 13 out of the past 15 weeks.

Giving individual investors cause for concern is the slow pace of U.S. economic growth and uncertain pace of global economic growth, terrorism and global unrest, lackluster corporate earnings, the prevailing level of valuations, the forthcoming election and monetary policy. Some AAII members, however, are encouraged by sustained domestic economic growth, corporate earnings and still comparatively low energy prices.

This week’s AAII Sentiment Survey results:

  • Bullish: 27.8%, down 2.3 percentage points
  • Neutral: 44.3%, up 3.6 percentage points
  • Bearish: 27.8%, down 1.2 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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