AAII Sentiment Survey: Pessimism Pulls Back


Pessimism among individual investors about the short-term direction of stock prices pulled back to its lowest level in a month. The latest AAII Sentiment Survey also shows increases in both bullish and neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.2 percentage points to 39.8%. The increase puts optimism above its historical average of 38.5% for just the sixth time this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 1.7 percentage points to 33.3%. This is the 24th consecutive week that neutral sentiment is above its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 5.9 percentage points to 26.9%. This is a four-week low. The drop puts pessimism back below its long-term historical average of 30.5% for the fourth time in five weeks.

The improvement in optimism and pullback in pessimism occurred as the large-cap indexes continued to set new record highs. At current levels, all three sentiment readings are well within their typical historical ranges.

Political drama in Washington remains at the forefront of many individual investors’ minds. (Many are skeptical about the prospects of tax reform being passed. Valuations are also playing a role, creating concern among some about stocks being overpriced and potentially leading to a correction. Others, however, are encouraged by the continuing economic and earnings growth as well as the market’s upward momentum.

This week’s AAII Sentiment Survey results:

  • Bullish: 39.8%, up 4.2 percentage points
  • Neutral: 33.3%, up 1.7 percentage points
  • Bearish: 26.9%, down 5.9 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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