The percentage of individual investors describing their outlook for stocks as “neutral” is at a seven-month high. The latest AAII Sentiment Survey also shows a drop in optimism and an increase in pessimism.
Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 4.8 percentage points to 35.1%. Optimism is back below its historical average of 38.5% for the 19th time in 23 weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.5 percentage points to 39.8%. Neutral sentiment was last higher on July 25, 2018 (41.6%). The increase keeps neutral sentiment above its historical average of 31.0% for the fourth time in six weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 2.3 percentage points to 25.1%. This is the first time pessimism is below its historical average of 30.5% on back-to-back weeks since August 15, 2018, through September 5, 2018.
At current levels, all three sentiment indicators are within their typical historical ranges, though neutral sentiment is very close to the top of its range.
While the rebound in stock prices is encouraging some individual investors, others have concerns about its sustainability. Many individual investors are monitoring trade negotiations. Also having an influence are Washington politics (including President Trump and Democratic control of the House of Representatives), corporate earnings, the Federal Reserve, valuations and concerns about the pace of economic growth.
This week’s AAII Sentiment Survey results:
- Bullish: 35.1%, down 4.8 percentage points
- Neutral: 39.8%, up 2.5 percentage points
- Bearish: 25.1%, up 2.3 percentage points
- 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.
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