The AAII Sentiment Survey for the Frame Ended 8 June 2016

The AAII Sentiment Survey for the Frame Ended 8 June 2016

The AAII Sentiment Survey for the Frame Ended 8 June 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.

Historical Average: 38.5%

Bullish: 27.8%, -2.3%
Historical average: 31.0%
Neutral:  44.3%, +3.6%
Historical: 30.5%
Bearish: 27.8%,  -1.2

Commentary

Pessimism declined to a 6-wk low, and Neutral sentiment remained above 40% for a 13th week running.

Pessimism about the short-term direction of stocks is at a 6-week low, according to the latest AAII Sentiment Survey. Neutral sentiment is up, while Optimism is down.

Bullish sentiment

Expectations that stock prices will rise over the next months, pulled back by 2.3% to 27.8%. The decline follows last week’s 12.4% jump to a 6-wk high of 30.2%. This week’s decrease keeps Optimism below its historical average of 38.5% for the 31st straight week and the 64th out of the past 66 weeks.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rebounded by 3.6% to 44.3%.  This is the 13th straight weekly reading above 40% and the 19th week running that Neutral sentiment has been above its historical average of 31.0%.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, declined by 1.2% to 27.8%. Pessimism was last lower on 20 April 2016 (23.9%). Bearish sentiment has been below its historical average of 30.5% for the 13 out of the past 15 weeks.

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

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

This week’s special question asked AAII members why it does or does not matter if the major US stock indexes rise above their record highs in the near term.

  1. 49% said it does not matter. Many of these members said they invest for the long term and/or are more focused on their allocations. Several others said factors such as the economy and the presidential election are having a bigger influence on their outlook.
  2. 33% of respondents said a new high would be a positive event and should lead to higher prices.
  3. 6% think such a move would confirm their belief that stocks are overpriced and would increase the odds of a new decline occurring.

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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