AAII Sentiment Survey: Optimism Jumps to a 3-Month High

Optimism about the short-term direction of stock prices jumped to a three-month high in the latest AAII Sentiment Survey. Neutral sentiment also rose, while pessimism plunged.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 8.1 percentage points to 39.9%. Optimism was last higher on November 7, 2018 (41.3%). This is just the fourth time in five months that bullish sentiment is at or above its historical average of 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 0.9 percentage points to 37.3%. Neutral sentiment was last higher on August 1, 2018 (38.8%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 9.0 percentage points to 22.8%. Pessimism was last lower on June 13, 2018 (21.7%). This is just the third time bearish sentiment is below its historical average of 30.5% during the past five months.

At current levels, all three sentiment indicators are within their typical historical ranges though pessimism is near the lower end of its range.

Even with this week’s big rise, optimism is close to its historical average. 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: 39.9%, up 8.1 percentage points
  • Neutral: 37.3%, up 0.9 percentage points
  • Bearish: 22.8%, down 9.0 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.

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