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AAII Sentiment Survey: Pessimism Rises as Neutral and Bullish Sentiment Fall

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Pessimism bounces back after two weeks of declining, according to the latest AAII Sentiment Survey. At the same time, neutral and bullish sentiment declined compared to last week.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 5.1 percentage points to 30.2%. The historical average is 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 1.8 percentage points to 32.4%. Despite the weekly decline, neutral sentiment remains above its historical average of 31.0% for the second consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 6.9 percentage points to 37.4%. The increase pushed bearish sentiment back up above its historical average of 30.5%.

Since the beginning of the year, bullish sentiment has declined 16.0 percentage points, while neutral sentiment has risen 3.8 percentage points and bearish sentiment has risen 12.2 percentage points over the same time period. Both neutral and bearish sentiment remain above their historical average, while bullish sentiment remains below its historical average.

Markets dipped slightly over the last week as investors began to question President Trump’s ability to move forward with promised legislation. The doubt was sparked after House Republicans failed to vote on a replacement for the Affordable Care Act (aka. Obamacare)—Trump’s first attempt to pass major legislation since being elected. Much of the market momentum since Election Day has been due to hopes that a new administration would enact policies favorable to the corporate environment and spur economic growth.

This week’s AAII Sentiment Survey results:

  • Bullish: 30.2%, down 5.1 percentage points
  • Neutral: 32.4%, down 1.8 percentage points
  • Bearish: 37.4%, up 6.9 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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