The AAII Sentiment Survey for the Frame Ended 21 September 2016

The AAII Sentiment Survey for the Frame Ended 21 September 2016

The AAII Sentiment Survey for the Frame Ended 21 September 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: Pessimism rose to its highest level since last June, while Neutral sentiment fell to a level not seen since last February.

This week’s results

Bullish: 24.8%, -3.1 pts
Neutral: 36.9%, + 0.7 pts
Bearish: 38.3%, + 2.4 pts
Historical averages:

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

Commentary

The percentage of individual investors expressing Pessimism about the short-term direction of the stock market is at its highest level since February. This week’s AAII Sentiment Survey also shows a slight increase in Neutral sentiment and a further decline in Optimism.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, fell 3.1% to 24.8%. The drop keeps Optimism at its lowest level since June 22, 2016 (22.0%). It also keeps bullish sentiment below its historical average of 38.5% for the 79th week out of the past 81.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next 6 months, edged up 0.7% to 36.9%. The increase puts Neutral sentiment above its historical average of 31.0% for the 34th week running.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, rose 2.4% to 38.3%. Pessimism was last higher on 10 February  2016 (48.7%). Bearish sentiment is still within its typical historical range, though it is above its historical average of 30.5% for the 3rd time in 4 weeks.

During the past 2 weeks, Pessimism has jumped by 9.8%, while Optimism has fallen by 5.0%. Concerns continue to exist about a potentially larger drop in stock prices than occurred earlier in the month. It is not completely clear how much influence the upcoming election is having on sentiment, though it is mentioned regularly without any prompt from us in response to the survey’s weekly special question.

The survey period runs from Thursday through Wednesday.

As such, the majority of this week’s survey responses were recorded before Wednesday’s FOMC statement and Wednesday’s new record high for the NASDAQ.

AAII members have expressed mixed opinions about the new record highs established by the major indexes this Summer.

In addition to worries about a potential larger drop in stock prices, some AAII members have expressed concern about valuations, global economic uncertainty and the pace of corporate earnings growth.

Giving other individual investors reason for Optimism are this Summer’s rise in stock prices, the perceived lack of investment alternatives, corporate earnings, low/stable energy prices and sustained, slow, economic growth.

This week’s special question asked AAII members how, Crude Oil prices are affecting their outlook for the stock market in general.

  1. 46% said Crude Oil prices are not influencing their outlook for stocks. Some said the presidential election is having a greater impact on their sentiment.
  2. 11% of all respondents view low Crude Oil prices as being good for the economy, and the market.
  3. 8% viewed low Crude Oil prices as being Negative, with some saying the lower prices reflect weak economic conditions.

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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