The AAII Sentiment Survey for the Frame Ended 11 May 2016

The AAII Sentiment Survey for the Frame Ended 11 May 2016

The AAII Sentiment Survey for the Frame Ended 11 May 2016

$DIA, $SPY, $QQQ, $VXX

The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months,

Individual members are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly voting frame.

Survey Results for frame Ended 11 May 2016

Data represents what direction members feel the stock market will be in the next 6 months.

This week’s AAII Survey results:

AAII Investor Update

Bullish: 20.4%, – 1.9 pts
Neutral: 48.3%, + 1.0 pts
Bearish: 31.3%, + 1.0 pts

Historical averages

Bullish: 39%
Neutral: 31%
Bearish: 30%

Commentary

Optimism among individual investors about the short-term direction of stock prices remained at a 3-month low according to the latest AAII Sentiment Survey.

Pessimism is at an 11-week high, and Neutral sentiment edged higher.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, fell 1.9% to 20.4%. Optimism was last lower on 11 February 2016 (19.2%). This is the 27th week running, and the 60th out of the past 62 weeks that Bullish sentiment has been below its historical average of 39.0%.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 1.0% to 48.3%. The rise keeps Neutral sentiment above 40% for a 9th week running. It also has Neutral sentiment above its historical average of 31% for a 15th straight week and the 67th out of the past 71 weeks.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, rose 1.0% to 31.3%. Pessimism was last higher on 25 February 2016 (31.4%). Bearish sentiment has now been above its historical average of 30% for 2 weeks running.

Ever since the S&P 500 index hit a Y  2016 high on 20 April, Optimism has declined by a cumulative 13%. The low level of Bullish sentiment is a continuation of an ongoing trend. Fewer than 1 of 3 survey respondents have described their short-term outlook for stocks as Bullish during 23 out of the past 26 weeks.

Giving individual investors cause for concern is the slow pace of US economic growth and uncertain global economic growth, terrorism and global unrest, lackluster corporate earnings and the prevailing level of valuations.

Some AAII members are encouraged by sustained domestic economic growth, expected corporate earnings growth and still-low energy prices.

This week’s special question asked AAII members which sectors or industries they like right now.

27% of respondents said that they currently favor the healthcare sector, particularly the pharmaceutical and biotechnology industries.

The 2nd-most-favorable sector was a tie between the financial and energy sectors, which each garnered favorable mention from 10% of respondents.

Other favorites were technology, consumer staples, and basic materials. A small percentage of members said that they are not now favoring any sectors or industries.

By Charles Rotblut, CFA

AAII Journal

Paul Ebeling, Editor

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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