AAII Sentiment Survey: Pessimism Falls to a Two-Month Low


Pessimism about the short-term direction of the stock market among individual investors is at its lowest level since mid-September. The latest AAII Sentiment Survey also shows a rebound in neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, is unchanged at 45.1%. Optimism is above its historical average of 38.5% for the sixth time in nine weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 5.4 percentage points to 31.8%. The rise follows what had been an eight-month low. The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.5 percentage points to 23.1%. Pessimism was last lower on September 13, 2017 (22.0%). Bearish sentiment is below its long-term historical average of 30.5% for the seventh week out of the past nine weeks.

Pessimism has fallen by a cumulative 10.0 percentage points over the past two weeks. The drop in bearish sentiment has occurred as the major large-cap indexes have continued to set new record highs. At their current levels, all three sentiment indicators are well within their typical historical ranges.

Some individual investors are encouraged by the growth in earnings, economic growth, progress on tax reform and/or the market’s upward momentum. Other individual investors view stocks as being a bit or too overpriced. The lack of volatility and the possibility of a forthcoming correction are also dampening sentiment. In addition, political drama in Washington continues to be at the forefront of many individual investors’ minds.

This week’s AAII Sentiment Survey results:

  • Bullish: 45.1%, no change
  • Neutral: 31.8%, up 5.4 percentage points
  • Bearish: 23.1%, down 5.5 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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