AAII Sentiment Survey, Pessimism Spikes to a 4-Month High

AAII Sentiment Survey, Pessimism Spikes to a 4-Month High

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat or fall over the next 6 months.

The weekly survey frame runs from Thursday at 12:01a to Wednesday at 11:59p.

sentiment chart 06-16-16


Pessimism among individual investors is at its highest mark and Neutral sentiment is at its lowest mark since February, according to the latest AAII Sentiment Survey for the frame ended 15 June 2016

Optimism remains at an unusually low mark.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, declined 2.5%  to 25.3%. This is the 7th time in the past 8 weeks that fewer than 3 out of 10 survey respondents are optimistic. It is also the 32nd week and running the 65th out of the past 67 weeks with Bullish sentiment below its historical average of 38.5%.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, plunged 7.2% to 37.2%. Neutral sentiment was last lower on 17 February 2016 (34.6%). Even with the big drop, neutral sentiment is above its historical average of 31.0% for the 20th straight week.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, surged 9.7% to 37.5%. Pessimism was last higher on 17 February 2016 (37.8%). The spike put Bearishness above its historical average of 30.5% for the 3 rd time in the 16 weeks.

The spike in Pessimism occurred as the major US indexes pulled back from their recent highs.

Many AAII members have previously expressed concerns about valuations and/or a potential drop in stock prices occurring.

No members specifically mentioned last weekend’s shooting at the Orlando nightclub in response to this week’s special question, though global terrorism is having an impact on some member’s market outlook.

The majority of this week’s votes were recorded prior to Wednesday’s FOMC announcement, as the survey frame runs from Thursday through Wednesday.

As far as next week’s UK referendum on Brexit, our survey suggests that individual investors are not considering it as part of their outlook for US stocks.

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 November elections and monetary policy.

Some AAII members are encouraged by sustained domestic economic growth, corporate earnings and the proximity of stock prices to their record highs.

This week’s AAII Sentiment Survey results:

  • Bullish: 25.3%, – 2.5%
  • Neutral: 37.2%, – 7.2%
  • Bearish: 37.5%, -9.7%

Historical averages:

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

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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