The AAII Sentiment Survey for the Frame Ended 11 August 2016

The AAII Sentiment Survey for the Frame Ended 11 August 2016

The AAII Sentiment Survey for the Frame Ended 11 August 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.

AAII Investor Update

This week’s results:

Bullish: 31.3%, + 1.5 pts
Neutral: 42%, – 1.5 pts
Bearish: 26.8%, Unchanged

Historical averages:

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

Commentary

Optimism among individual investors about the short-term direction of stock prices rebounded back above 30% in the latest AAII Sentiment Survey. Neutral sentiment pulled back modestly, while Bearishness was unchanged.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, rose 1.5% to 31.3%. The rise reversed last week’s decline. This is the 40th week running and the 73rd out of the past 75 weeks with a Bullishness reading below its historical average of 38.5%.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, declined 1.5% to 42.0%. This is the 28th straight week with a Neutral sentiment reading above its historical average of 31.0%.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, is unchanged at 26.8%. Pessimism is below its historical average of 30.5% for the 6th consecutive week.

Bullish sentiment is above 30% for the 5th time in 6 weeks.

This shows just how low optimism has been. Over the span of the past 12 months, Bullish sentiment was at or above 30% during 14 out of 16 weeks between 12 August and 25 November 2015, and during 6 out of 7 weeks between 24 February and 6 April 2016. The remainder of the time, optimism has mostly stayed below 30%. So, optimism has improved recently overall on a comparative basis.

This week’s special question asked AAII members how, if at all, they have adjusted their investing strategy recently.

  1. 55% said they are focusing on or have shifted more into stocks, particularly value and dividend-paying stocks.
  2. 27% say they have not changed their strategy
  3. 12% said they are increasing their cash allocation.
  4. 8% said they are taking a more conservative approach.

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain flat or fall over the next 6 months. The survey period runs from Thursday (12:01a) to Wednesday (11:59p).

By Charles Rotblut, CFA

AAII Journal

Paul Ebeling, Editor

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