AAII Sentiment: Investor Optimism Pulls Back Following Post Election Spike
Optimism pulled back in the latest AAII Sentiment Survey after having risen significantly over the previous 3 weeks.
Both Neutral and Bearish sentiment rebounded this week, after having both fallen prior.
Expectations that stock prices will rise over the next 6 months, fell by 6.1% to 43.8%. The pullback follows last week’s reading of 49.9%, which was the highest mark recorded by our survey since 1 January 2015 (51.7%). Even with this week’s drop, Bullish sentiment remains above its historical average of 38.5% for a 4th week running.
Expectations that stock prices will stay essentially unchanged over the next 6 months, rebounded by 3.1% to 31.1%. The increase puts neutral sentiment about even with its historical average of 31.0%.
Expectations that stock prices will fall over the next 6 months, rose 3.0% to 25.1%. Pessimism was last lower on 17 August 2016. The increase is not large enough to prevent Pessimism from remaining below its historical average of 30.5% for a 4th straigh week.
The rise in Bullish sentiment was the 13th largest 3-week increase in the AAII survey’s 29-year history.
As I will discuss in this evening’s AAII Investor Update, on average, the S&P 500 has only been slightly positive over the six-month periods that followed the 12 previous increases in optimism (up 6 times and down 6 times).
Furthermore, unusually high weekly readings of Optimism have historically been followed by below-average returns for the S&P 500.
The average 6-month return for the S&P 500 following such readings is 2.7%.
|NYSEArca:SPY||219.68||2 December 2016||0.11||219.67||220.25||219.26||74,840,300|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Neutral (0.21)||Neutral (0.15)||Bullish (0.29)||Neutral (0.19)|
By Charles Rotblut,
Paul Ebeling, Editor