AAII Sentiment Survey: Optimism Rises to A Four-Week High

Posted on July 23, 2015 | AAII Survey

Optimism rose to a four-week high in the latest AAII Sentiment Survey. Pessimism also rose, as neutral sentiment fell to a five-week low.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.7 percentage points to 32.5%. This is the first time optimism has been above 30% on consecutive weeks since April 30, 2015. Even with the increase, bullish sentiment remains below its historical average of 39.0% for a 20th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell by 4.1 percentage points to 41.9%. This is the lowest neutral sentiment has been since June 18, 2015 (40.3%). The drop is not large enough to prevent neutral sentiment from staying above its historical average of 31.0% for a 29th consecutive week and above 40% for a record 16th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 2.4 percentage points to 25.6%. The historical average is 30.0%.

The recent rise in large-cap stocks, including the record high set by the NASDAQ earlier this week, has helped to make some individual investors more optimistic. Since the beginning of July, bullish sentiment has rebounded by a cumulative 9.9 percentage points. The level of optimism remains low by historical standards, however, as bullish sentiment has not been above its historical average since March 5, 2015.

Keeping some AAII members optimistic is the Federal Reserve’s still-accommodative monetary policy, the ongoing bull market, sustained economic expansion and earnings growth. Causing some AAII members to be cautious are concerns about the possibility of a sizeable decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger dollar on earnings and geopolitical events.

This week’s AAII Sentiment Survey results:

  • Bullish: 32.5%, up 1.7 percentage points
  • Neutral: 41.9%, down 4.1 percentage points
  • Bearish: 25.6%, up 2.4 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 31.0%
  • Bearish: 30.0%

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.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.



Sell OF THE WEEK 7/22/2015

Posted on July 22, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Dover Corp. (DOV) is his “Sell of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Sell of the week





BUY OF THE WEEK 7/21/2015

Posted on July 21, 2015 | Podcast

AAII Journal Editor Charles Rotblut explains to Chuck Jaffe of MarketWatch why Ultra Clean Holdings (UCTT) is his “Buy of the Week” on the MoneyLife Radio Program. MoneyLife is a daily personal finance show that sorts through the financial clutter to bring you the information you need to lead the MoneyLife.

Audio url: Buy of the week




AAII WEEKLY FEATURE 7/21/2015

Posted on July 21, 2015 | Weekly Features

weekly-features

This week’s AAII Weekly Features has been updated.
View this week’s Top AAII Articles, Featured Stock Screen and Member Question.

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Earnings Season Is Upon Us Yet Again

Posted on July 21, 2015 | Dividend Investing

Earnings season is back again and with Greece’s debt problem (almost) behind us, investors can focus on quarterly earnings figures.

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NASDAQ Hits Record High

Posted on July 21, 2015 | Stock Superstars Report

The NASDAQ set a new record high this week. The surge in technology valuations has some analysts concerned about a new bubble inflating. Earlier this week, MarketWatch ran an article indicating that technology stocks are now high enough to cause flashbacks to the technology bubble of 2000. Investors are better served, however, by looking at the valuations of individual stocks than being swayed by headlines.

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Consider Your Tolerance for Risk Before Abandoning Bonds

Posted on July 16, 2015 | Investor Update

Investor-Update

The cover of this week’s Barron’s reads “Trouble Ahead for Bond Funds.” It refers to an article discussing the downside of holding bond funds in the current environment. Specifically, the article discusses the risk of a decline in prices should interest rates rise.

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AAII Sentiment Survey: Bullish Sentiment Rises Above 30%

Posted on July 16, 2015 | AAII Survey

Bullish sentiment rose above 30% for just the second time since April in the latest AAII Sentiment Survey. The rebound occurred as bearish sentiment fell for a second consecutive week. Neutral sentiment, meanwhile, tied a 27-year record for the most consecutive weeks of staying at or above 40%.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.9 percentage points to 30.8%. The rebound puts optimism up into the lower level of its typical range. Even with the increase, bullish sentiment remains below its historical average of 39.0% for a 19th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 3.0 percentage points to 45.9%. The increase keeps neutral sentiment above its historical average of 31.0% for the 28th consecutive week and at an unusually high level for a 15th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell by 5.9 percentage points to 23.2%. This was the second consecutive weekly decline of 5.9 percentage points. The historical average is 30.0%.

Pessimism has declined by a cumulative 11.8 percentage points since hitting a 2015 high of 35.1% on July 1, 2015. Over the same period, optimism has risen by 8.2 percentage points. The moves have occurred as the S&P 500 has established a near-term bottom and subsequently rebounded.

As noted above, this is the 15th consecutive week with a neutral sentiment reading above 40%. This ties a record set between November 13, 1987, and March 4, 1988, for consecutive weeks where neutral sentiment is at or above 40%. Unusually high readings of neutral sentiment (currently above 39.6%) have been associated with better-than-average returns for the S&P 500. For more information, see my May 21 AAII Investor Update, Unusually High Neutral Sentiment Often Followed by Good Returns. (There is no guarantee, however, that history will repeat.)

Keeping some AAII members optimistic is the Federal Reserve’s still-accommodative monetary policy, the ongoing bull market, sustained economic expansion and earnings growth. Causing some AAII members to be cautious are concerns about the possibility of a bigger decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger dollar on earnings and geopolitical events.

This week’s AAII Sentiment Survey results:

  • Bullish: 30.8%, up 2.9 percentage points
  • Neutral: 45.9%, up 3.0 percentage points
  • Bearish: 23.2%, down 5.9 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 31.0%
  • Bearish: 30.0%

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.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey.



AAII Members Unconcerned About Chinese Market Drop

Posted on July 16, 2015 | AAII Survey

This week’s Sentiment Survey special question asked AAII members whether, and why or why not, their short-term outlook for U.S. stocks was affected by the recent drop in Chinese stocks. Nearly three-fourths (74%) of all respondents said the June/early July drops in the Shanghai and Shenzhen exchanges have not impacted their short-term expectations for how U.S. stocks will perform. Reasons given were mixed, though many said they do not invest in Chinese stocks, view the Chinese markets as having a low correlation with the U.S. markets or that Chinese stocks had a big upward run before the recent plunge. Others simply said that they follow a long-term investment strategy.

About 18% of respondents said they are more cautious about U.S. stocks following the price drop in Chinese stocks. Their concerns include a slowing of U.S. economic growth caused by China and the potential for a negative, spillover effect on U.S. stock markets.

Here is a sampling of the responses:

  • “Chinese stocks have risen so much, it’s not surprising that they would take a few steps backwards at some point.”
  • “I’m not a short-term outlook type of guy. I prefer to stay the course, barring disasters.”
  • “I refuse to invest in China due to the political influence of the Chinese government.”
  • “It seems that over the long term, U.S. stocks react more profoundly to domestic economic news.”
  • “The Chinese slowdown will have a negative impact due to the number of U.S. companies that do significant business in China.”


The July 2015 passing company lists and performance data is now available on-line.

Posted on July 15, 2015 | Stock Screens

YTD Return of Top Performers: Foolish Small Cap 8 Revised: 65.5% — Foolish Small Cap 8: 60.1%

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