AAII Investor Sentiment Survey

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Since 1987, AAII members have been answering the same simple question each week. The results are compiled into the AAII Investor Sentiment Survey,
which offers insight into the mood of individual investors.

Survey Results for Week Ending 10/26/2016

Data represents what direction members feel the
stock market will be in next 6 months.

Percentage point
change from
last week
Percentage point
change from
last week
Percentage point
change from
last week

Note: Numbers may not add up to 100% because of rounding.

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 including Barron's and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals.

AAII Sentiment Survey:

Optimism is below 30% for the 10th consecutive week, and remains at an unusually low level.

October 27, 2016

Optimism among individual investors about the short-term direction of stock prices is below 30% for the 10th consecutive week. Neutral sentiment rebounded, while pessimism pulled back.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 1.0 percentage points to 24.8%. Optimism is below its historical average of 38.5% for the 51st consecutive week and the 84th out of the past 86 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.7 percentage points to 41.2%. The increase follows what had been a four-week low. It also keeps neutral sentiment above its historical average of 31.0% for the 39th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 3.7 percentage points to 34.1%. Even with the decline, pessimism is above its historical average of 30.5% for the seventh time in nine weeks.

As noted above, the percentage of individual investors describing their short-term outlook as "bullish" has now been below 30% for 10 consecutive weeks. During six of those weeks, optimism has been below 28.0%, the breakpoint between the normal range of readings and unusually low readings. Not surprisingly, the S&P 500 and the Russell 2000 have both declined over this period.

Causing concern for individual investors is the lack of new market highs, the possibility of the stock market experiencing a larger drop, valuations, the November elections, global economic uncertainty and the pace of corporate earnings growth. Giving other individual investors reason for optimism are the perceived lack of investment alternatives, corporate earnings, low/stable energy prices and sustained, albeit slow, economic growth.

This week’s special question asked AAII members how the inability of stocks to retest or rise above their summer highs is influencing their outlook. Nearly one out four respondents (24%) said that the price action has caused them to be pessimistic or cautious. Conversely, a similar number of respondents said that their outlook is not being influenced by the inability of stocks to rise to new highs or that the recent price action is having little influence on their outlook. Several of these respondents described themselves as long-term investors. Approximately 13% of respondents are waiting to see the results of the election before setting short-term expectations. Another 11% are waiting for a catalyst to drive stocks in one direction or another. Slightly more than 9% view the lack of new highs as a positive sign.

Here is a sampling of the responses:

  • “When we get through this crazy presidential race, maybe we can get a better idea of where we’re going.”
  • “Confirms my belief that we are entering a bear market.”
  • “It feels like the market is consolidating and is positioning itself for the next move up.”
  • “Little or no effect. I’m unconcerned about short-term indicators.”
  • “No influence. I’m awaiting the election results and the restart of interest rate increases.”

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How to Use the AAII Sentiment Survey as a Gauge of Future Market Direction

Over the years, AAII analysts have examined the weekly results and have tried to give some perspective to the data. These articles are the results of some of this analysis.

Analyzing the AAII Sentiment Survey Without Hindsight »
Using the AAII Sentiment Survey as a Contrarian Indicator »