AAII Sentiment Survey, 18 January 2017
$DIA, $SPY, $QQQ
Optimism fell to its lowest level since the Presidential Election, ending a streak of 9 straight weeks with Bullish sentiment above 40%.
This week’s results:
Bullish: 37.0%, – 6.6 pts
Neutral: 30.3%, – 0.9 pts
Bearish: 32.7%, – 5.7 pts
Optimism among individual investors waned, falling to its lowest level since the election, in the latest AAII Sentiment Survey. Both neutral sentiment and pessimism rose.
Expectations that stock prices will rise over the next 6 months, fell 6.6% to 37.0%. Optimism was last lower on 2 November 2016 (23.6%). The historical average is 38.5%.
Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 0.9% to 30.3%. Neutral sentiment was last higher on 7 December 2016 (30.4%). The rise is not large enough to keep Neutral sentiment from remaining below its historical average of 31.0% for the 7th week running, and the 9th time in 10 weeks.
Expectations that stock prices will fall over the next 6 months, jumped 5.7% to 32.7%. Pessimism was last higher on 2 November 2016 (34.3%). This is also just the 2nd time in 11 weeks that Bearish sentiment is above its historical average of 30.5%.
The drop in Optimism ends a streak of 9 straight weeks with bullish sentiment above 40%, the longest such streak since 15 October through 10 December 2014. The decline is occurring as The Trump Rally paused. At current marks, all 3 sentiment indicators are close to their historical averages.
The potential impact that President Donald Trump could have on the economy is causing uncertainty or concern among some investors, while encouraging others.
Also influencing investor sentiment are valuations, earnings, consumer sentiment and the magnitude and timing of future interest rates.
This week’s special question asked AAII members for their thoughts about the recent new record highs set by the NASDAQ. Responses were mixed, as follows:
- 18% of respondents think that the NAS will continue to rise, with the upward momentum primarily being driven by tech stocks.
- 6% view the record highs as a positive event.
- 12% attributed the upward momentum to President Donald Trump’s November victory. These respondents were largely split between those who viewed the new administration as being business-friendly and those who think the index will stabilize after the Inauguration.
- 18% of respondents think the NAS and/or the broader market will pull back.
- 11% say that the index is overvalued.
Charles Rotblut, CFA
Paul Ebeling, Editor