The AAII Sentiment Survey for the Frame Ended 2 November 2016

The AAII Sentiment Survey for the Frame Ended 2 November 2016

The AAII Sentiment Survey for the Frame Ended 2 November 2016

$DIA, $SPY, $QQQ, $VXX, $OIL

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: Optimism fell to a low mark not seen since last June.

This week’s results:

Bullish: 23.6%, – 1.1 points
Neutral: 42%, – 0.9 points
Bearish: 34.3%, – 0.2 points

Historical averages:

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

Commentary

Optimism among individual investors about the short-term direction of stock prices fell to a very low level as the streak of below-average readings was extended to a full year’s span.

This week’s AAII Sentiment Survey also shows increases in both Neutral and Bearish sentiment.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, declined 1.1% to 23.6%. Optimism was last lower on 22 June 2016 (22.0%). The drop keeps Bullish sentiment below its historical average of 38.5% for the 52nd straight week and the 85th out of the past 87 weeks.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 0.9% to 42.0%. This is a 4-week high. This week’s rise keeps neutral sentiment above its historical average of 31.0% for the 40th week running

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, edged up 0.2% to 34.3%. This is the 1st time that pessimism has been above its historical average of 30.5% for a period of 4 straigh weeks or more since an 8-week stretch between 6 January and 24 February 2016.

This week’s Bullish sentiment reading ranks as the 104th lowest reading out of the more than 1,500 weekly results recorded during the 29-year history of our weekly survey.

Optimism was last above its historical average of 38.5% on 4 November 2015 (39.0%).

The very low level of Bullish sentiment is occurring as stock prices continue to show weakness and Election Day nears.

Other factors contributing to low readings include the possibility of the stock market experiencing a larger drop, valuations, global economic uncertainty and the pace of corporate earnings growth.

Giving some individual investors reason for optimism are the perceived lack of investment alternatives, corporate earnings, low/stable energy prices and sustained, economic growth.

This week’s special question asked AAII members for their opinion of the dividend yields that stocks currently trade at.

Responses varied.

The largest group of respondents (23%) described dividends as currently being too low. Several said that the low dividends indicate high valuations for stocks.

Slightly more than 12% felt that dividend yields are currently adequate.

Approximately 10% described the current dividend yields as being better than what is available on bonds and bank accounts.

Roughly 7% said that dividends are currently too high or otherwise unsustainable.

Nearly 4% thought that yields are attractive at current levels.

Take the Sentiment Survey.

By Charles Rotblut, CFA

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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