AAII Sentiment Survey: Optimism Rises to Nearly 37%
Optimism among individual investors about the short-term direction of stock prices is at a level not seen in over four months, according to the latest AAII Sentiment Survey. Meanwhile, neutral sentiment and bearish sentiment both declined.
Expectations that stock prices will rise over the next ^ months, jumped 5.8% to 36.9%. Optimism was last higher on 9 March 2016 (37.4%). Even with this week’s increase, bullish sentiment remains below its historical average of 38.5% for the 36th week running and the 69th out of the past 71 weeks.
Expectations that stock prices will stay essentially unchanged over the next 6 months, pulled back by 3.6% to 38.7%. Neutral sentiment is above its historical average of 31.0% for the 24th week running.
Expectations that stock prices will fall over the next 6 months, declined 2.2% to 24.4%. Pessimism was last lower on since 20 April 2016 (23.9%). The historical average is 30.5%.
Since registering 22.0% on 22 June 2016, optimism has rebounded by 14.9%. Though it’s a big move, some context is needed.
1st, as noted above, Bullish sentiment remains below average.
2nd, this is just the 2nd time since last November that optimism has exceeded 30% on consecutive weeks. Bullish sentiment was above 30% during the 3-week span of 24 February through 9 March 2016.
The rebound in stock prices and the new record highs set by the S&P 500 have had a positive impact on some individual investors.
Others are encouraged by the sustained economic growth.
A view that there is there is no good alternative to stocks is contributing to the optimism.
Giving reason for caution or pessimism is global economic uncertainty (including Brexit), the prevailing level of valuations and disappointment with corporate earnings growth.
The US Presidential election and monetary policy are also impacting individual investor sentiment.
This week’s AAII Sentiment Survey results:
- Bullish: 36.9%, + 5.8%
- Neutral: 38.7%, – 3.6%
- Bearish: 24.4%, – 2.2%
- Bullish: 38.5%
- Neutral: 31.0%
- Bearish: 30.5%
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
Paul Ebeling, Editor