The AAII Sentiment Survey for the Frame Ended 24 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.
Investor Update: Pessimism rose to a two-month high as optimism fell from a 5-week high.
This week’s results:
Bullish: 29.4%, – 6.1 pts
Neutral: 40.9%, + 2.9 pts
Bearish: 29.6%, + 3.3 pts
Pessimism among individual investors about the short-term direction of stock prices is at a 2-month high in the latest AAII Sentiment Survey.
Optimism fell to back below 30%, Neutral sentiment rebounded some.
Expectations that stock prices will rise over the next 6 months, plunged 6.1% to 29.4%. Optimism was last lower on 29 June, 2016. This is the 75th week out of the past 77 that Optimism is below its historical average of 38.5%.
Expectations that stock prices will stay essentially unchanged over the next 6 months, rebounded by 2.9% to 40.9%. The rebound puts Neutral sentiment above 40% for the 4th time in 5 weeks. It also keeps Neutral sentiment above its historical average of 31.0% for the 30th week running.
Expectations that stock prices will fall over the next 6 months, rose 3.3% to 29.6%. This is the highest reading of pessimism since 29 June 2016 (33.4%). The increase is not large enough to prevent Bearish sentiment from staying below its historical average of 30.5% for the 8th week running.
This week’s decline in Optimism follows what had been a 5 week high.
Pessimism rose from what had been a 5 week low.
Though the major US indexes were relatively unchanged over the past 7 days, concerns about valuations and the presidential election continue to temper individual investors’ expectations.
Also keeping some individual investors Bearish or at least giving them reason to be cautious are global economic uncertainty and disappointment with corporate earnings growth.
Giving other individual investors reason for Optimism are the Summer’s upward movement in stock prices, the perceived lack of investment alternatives, corporate earnings and slow, economic growth.
This week’s special question asked AAII members how Q-2 earnings have influenced their outlook for stock prices, as follows:
- 41% said that Quarterly corporate profits have not altered their outlook. Reasons were mixed, though some said the presidential election is having more influence, while others said short-term results do not alter their long-term outlook.
- 17% said that Q-2 earnings had a positive influence on their outlook for stock prices
- 13% described themselves as being more cautious or are otherwise pessimistic about the direction of stock prices following Q-2 earnings season.
By Charles Rotblut, CFA
Paul Ebeling, Editor