The AAII Sentiment Survey for the Frame Ended 27 April 2016
$DIA, $SPY, $QQQ, $VXX
The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly voting frame.
Survey Results for frame Ended 27 April 2016
Data represents what direction members feel the stock market will be in the next 6 months.
This week’s AAII Sentiment Survey results:
Bullish: 27.4%, – 6.0 pts
Neutral: 44%, + 1.4 pts
Bearish: 28.6%, + 4.7 pts
Pessimism among individual investors about the near-term direction of stock prices is at its highest mark in 2 months, according to the latest AAII Sentiment Survey.
Neutral sentiment is higher, Optimism is lower.
Expectations that stock prices will rise over the next 6 months, fell 6.0% to 27.4%. The Fall more than reverses last week’s rise and puts Optimism at a 4-week low. The drop also keeps optimism below its historical average of 39.0% for the 25th week running and the 58th out of the past 60 weeks.
Expectations that stock prices will stay unchanged over the next 6 months, rose 1.4% to 44.0%. The rise keeps Neutral sentiment above 40% for a 7th straight week. This week’s increase keeps Neutral sentiment above its historical average of 31.0% for the 13th great week and the 65th out of the past 69 weeks.
Expectations that stock prices will fall over the next 6 months, jumped 4.7% to 28.6%. Pessimism was last higher on 2 March 2016 (29.2%). This week’s increase was not large enough to prevent Pessimism from staying below its historical average of 30.0% for a 9th straight week.
The survey period is Thursday through Wednesday. As such, most of the responses to this week’s survey were logged before yesterday’s FOMC statement was released.
Even though the S&P 500 index is trading near its high and the smaller-cap Russell 2000 index has rebounded too, many individual investors remain cautious.
Fewer than 1 out of 3 survey respondents have described their short-term outlook for stocks as Bullish during 21 out of the past 24 weeks. As stated last week, when the S&P 500 set its last record closing high on 21 May 2015, just 25.2% of surveyed individual investors described their outlook as Bullish.
Giving individual investors cause for concern is the slow pace of US economic growth and uncertain global economic growth, terrorism and global unrest, lackluster corporate earnings and the prevailing level of valuations.
Some AAII members are encouraged by sustained domestic economic growth, expected corporate earnings growth and still-low energy prices.
This week’s Big Q asked AAII members whether it makes sense for the S&P 500 to be trading near its record high.
Respondents were divided
38% said it makes sense and 36% said it does not.
The low levels of interest rates and bond yields were primarily cited as the reasons why it makes sense for the S&P 500 to be trading at current marks. The lack of adequate earnings growth and stock valuations were the primary reasons given for why the large-cap index should not be trading at current levels.
By Charles Rotblut, CFA
Paul Ebeling, Editor