The AAII Sentiment Survey for the Frame Ended 7 September 2016

The AAII Sentiment Survey for the Frame Ended 7 September 2016

The AAII Sentiment Survey for the Frame Ended 7 September 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: Pessimism rose above 30% for the 1st time in 9 weeks, Optimism fell.

This week’s results

Bullish: 29.7%, +1.1 pts
Neutral: 41.8%, + 1.9 pts
Bearish: 28.5%, +3.0 pts

Historical averages:

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

Commentary

The proportion of individual investors describing their short-term outlook for stocks as “Neutral” is at its highest level in a month, according to the latest AAII Sentiment Survey.

Optimism rebounded

Pessimism fell.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, rebounded by 1.1% to 29.7%. This is the 3rd week running that Optimism is below 30%. It is also the 77th week out of the past 79 with a Bullish sentiment reading below its historical average of 38.5%.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose by 1.9% to 41.8%. Neutral sentiment was last higher on 3 August 2016 (43.4%). The rise keeps Neutral sentiment above its historical average of 31.0% for the 32nd straight week.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, fell by 3.0% to 28.5%. This week’s decrease puts Bearish sentiment back below its historical average of 30.5% for the 9th time in 10 weeks.

The NAS Comp’s highs did not have a significant impact on individual investor sentiment, as that the highs happened during the latter half of the survey period. Likely playing a bigger role are concerns about valuations and/or the Presidential election.

Also keeping some individual investors Bearish, or at least giving them reason to be cautious, are global economic uncertainty and disappointment with 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 and sustained, albeit slow, economic growth.

This week’s special question asked AAII members how big of an impact international events are having on their outlook for the US stock market.

  1. 62% said that international events are having no or very little impact on their outlook for US stocks.
  2. 18% said that international events are negatively influencing their outlook.

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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