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Optimism Has Been Low This Year, but Not Unusually So

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This week notwithstanding, optimism about the short-term direction of the stock market

has been below average for 40 out of 50 weeks this year in our AAII Sentiment Survey. Given this trend, I was curious as to how 2017 compares to the 30 previous years tracked by our survey. So, I updated the historical analysis I’ve been keeping on unusually high and low readings (see the table at the end of this commentary) and then conducted calendar-year analysis.

Year to date, bullish sentiment is averaging 34.5% (including this week’s latest reading of 45.0%). Historically, bullish sentiment has averaged 38.5% over the life of our survey. (The average is technically 38.27%, but investing is messy and rounding works well enough.) Relative to the other 30 calendar years we have survey data for, 2017 ranks eighth in terms of having the lowest average bullish sentiment.

As you can see on the table located to the right, 1988 and 1990 had the lowest average levels of optimism at 27.3% each. Notably, in third and fourth place were 2016 and 2015. Not shown in the table are the years with the highest level of average bullish sentiment: 2000 (49.4%), 2004 (49.0%) and 2003 (48.4%). Continue Reading »


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Highlights from this month’s AAII Journal


AAII Sentiment Survey

Bullish sentiment jumped to a five-week high, while both neutral and bearish sentiment fell. More about this week’s results.

This week’s results:

  • Bullish: 45.0%, up 8.1 points
  • Neutral: 26.9%, down 2.0 points
  • Bearish: 28.1%, down 6.1 points

Historical averages:

  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

What’s Trending on AAII

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  3. The Individual Investor’s Guide to Personal Tax Planning 2017

The Week Ahead

The Senate is expected to vote on the Tax Cuts and Jobs Act possibly as early as Monday, according to news reports. If it passes (and political observers expect it to pass), the House of Representatives will vote afterward. CNBC’s Larry Kudlow said that the provision requiring investors use first-in, first-out accounting when selling shares of a stock bought on different dates has been removed, though the text of the revised bill has yet to be made available.

We’ll get an initial look at fourth-quarter earnings with 12 members of the S&P 500 scheduled to announce their results. Included in this group are Micron Technology Inc. (MU) and FedEx Corp. (FDX) on Tuesday and Dow Jones industrial average component Nike Inc. (NKE) on Thursday.

The week’s first economic report will be the December Housing Market Index, released on Monday. November housing starts and building permits will be released on Tuesday. November existing home sales will be released on Wednesday. Thursday will feature the final revision to third-quarter GDP and the Philadelphia Federal Reserve’s December business outlook survey. November durable goods orders, November personal income and spending, November new home sales and the University of Michigan’s final December consumer sentiment survey will be released on Friday.

One Federal Reserve official will make a public appearance this week, Minneapolis president Neel Kashkari on Tuesday.

The Treasury Department will auction $14 billion of five-year inflation adjusted securities (TIPS) on Thursday.


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