The AAII Sentiment Survey for the Frame Ended 17 August 2016

The AAII Sentiment Survey for the Frame Ended 17 August 2016

The AAII Sentiment Survey for the Frame Ended 17 August 2016

$DIA, $SPY, $QQQ, $VXX

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

The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications and are widely followed by market strategists, investment newsletter writers and other financial professionals.

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

Investor Update

This week’s results:

Bullish: 35.6%, + 4.3 points
Neutral: 38.1%, – 3.9 points
Bearish: 26.4%, – 0.4 points

Historical averages:

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

Commentary

Optimism about the 6-month direction of stock prices is at a 5-week high in the latest AAII Sentiment Survey.

Neutral sentiment fell and Pessimism is slightly lower.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, jumped 4.3 percentage points to 35.6%. Optimism was last higher on 13 July 2016 (36.9%). The increase is not large enough to prevent Bullish sentiment from staying below its historical average of 38.5% for the 41st week running and the 74th out of the past 76 weeks.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, fell 3.9 percentage points to 38.1%. Neutral sentiment was last lower on 29 June 2016 (37.7%). Even with the decline, neutral sentiment is above its historical average of 31.0% for the 29th straight week.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, declined 0.4 percentage points to 26.4%. This is the 7th consecutive week that Pessimism is below its historical average of 30.5%. It is also the 5th time in 7 weeks that Bearish sentiment has been within a 0.3-percentage-point range.

The improvement in sentiment is occurring as the large-cap indexes continue to trade at or near record highs and small-cap stocks are experiencing upward momentum.

Most individual investors are keeping their outlook tempered.

This week is just the 6th in this calendar year with more than 1 out of 3 survey respondents describing themselves as being Bullish about the 6-month direction of stock prices.

Optimism has not been above its historical average of 38.5% since 4 November 2015, when it registered 39.0%.

This Summer’s upward movement in stock prices, the perceived lack of investment alternatives and sustained slow economic growth are giving some individual investors reason to be Optimistic.

Causes for concern are prevailing valuations, the presidential election, global economic uncertainty, including Brexit and disappointment with corporate earnings growth.

This week’s special question asked AAII members for their opinion on the current pace of economic growth, the results, as follows:

  1. 36% describe economic growth as slow, weak or anemic.
  2. 16% say economic growth is too slow
  3. 10% say growth is disappointing or otherwise unacceptable.
  4. 6% said they are encouraged by the pace of growth or otherwise describe the economy as growing.

By Charles Rotblut, CFA

equal 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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