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 7/27/2016

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


HISTORICAL AVERAGE: 38.5%
BULLISH
31.3%
-4.2
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.0%
NEUTRAL
40.3%
+2.5
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.5%
BEARISH
28.4%
+1.7
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:

Bearish sentiment rose to a four-week high, though it still remains below its historical average.

July 28, 2016

Pessimism among individual investors about the short-term direction of the stock market is at a four-week high, though continuing to remain below average, in the latest AAII Sentiment Survey. Neutral sentiment rose back above 40%, while optimism slipped.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.2 percentage points to 31.3%. The drop keeps optimism below its historical average of 38.5% for a 38th consecutive week and for the 71st out of the past 73 weeks. Bullish sentiment remains within its typical historical range, however.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.5 percentage points to 40.3%. The rise puts neutral sentiment back at an unusually high level. This is the 26th consecutive week that neutral sentiment is above its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose by 1.7 percentage points to 28.4%. Pessimism was last higher on June 29, 2016 (33.4%). The historical average is 30.5%.

As noted last week, this is the just the second time this year that optimism has stayed above 30% on consecutive weeks. The comparatively higher level of bullish sentiment comes as the major large-cap indexes trade at or near their record highs, though some (but not all) individual investors have doubts about the ability of stocks to hold their current price levels.

A lack of perceived viable investment alternatives, economic growth and upward momentum in stock prices is encouraging some individual investors about the short-term direction of stock prices. Giving reason for caution or pessimism is global economic uncertainty (including Brexit), the prevailing level of valuations and disappointment with corporate earnings growth. The presidential election and monetary policy are also impacting individual investor sentiment.

This week's special question asked AAII members what industries or sectors they like right now. Health care topped the list, named by 43% of all respondents. (Included in health care is biotech, which was specifically named by 11% of all respondents.) Technology ranked second, listed by 30% of respondents. About 16% said financial and/or banking stocks. Tied for fourth place were utilities, energy, real estate and consumer staples, each listed by just under 11% of respondents. Several AAII members listed more than one industry or sector.

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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 »