Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 26, 2012

Bullish sentiment stayed near 50% for the fourth consecutive week in the latest AAII Sentiment Survey. Bearish sentiment is unusually low for the third time in four weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded to 48.4%, an increase of 1.2 percentage points. This is the sixth time in seven weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rebounded by 3.5 percentage points to 32.7%. This is the fourth time in six weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell to 18.9%, a decrease of 4.7 percentage points. At more than one standard deviation below average, readings at this level are outside of the typical range for bearish sentiment we have seen over the survey's history. The historical average is 30%.

AAII members continue to remain optimistic about the short-term direction of stock prices. Though bullish sentiment is high, it is still within the range of optimism typically registered in the survey. A bullish sentiment reading above 50% would be considered unusually high, and a reading above 60% would be extraordinarily high, potentially signaling too much exuberance.

This week's special question asked AAII members what factors are causing them to be bullish, neutral or bearish. Respondents credited signs of an improving economy followed by better corporate earnings as the primary reasons for their optimism. Bearish respondents most frequently cited Europe's sovereign debt problems, followed by the economy, the federal deficit and Washington politics.

Here is a sampling of the responses:

• "The economic indicators are getting better; there is no choice but to turn bullish."
• "I'm bullish because of rising employment, the improving housing market and better corporate earnings."
• "The situation in Europe remains a overhang on the market."
• "Europe's problems and congressional infighting are going to keep the market in negative territory over the next six months."
• "With the elections in the U.S. and the problems in Europe, I think the ups and downs will even out."
• "We are at resistance and I don't think the current global economic conditions will let the market go up much more."

This week's AAII Sentiment Survey results:

• Bullish: 48.4%, up 1.2 percentage points
• Neutral: 32.7%, up 3.5 percentage points
• Bearish: 18.9%, down 4.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 19, 2012

Bullish sentiment is above average for the fourth consecutive week, while bearish sentiment rebounded in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.9 percentage points to 47.2%. Even with the drop, bullish sentiment is above its historical average of 39% for the fourth consecutive week and the 10th time out of the last 15 weeks.

Neutral sentiment, expectations that stock prices will remain essentially flat over the next six months, fell 4.5 percentage points to 29.2%. This is the first time in three weeks that neutral sentiment is below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 6.4 percentage points to 23.6%. Although this is a three-week high, pessimism is below its historical average of 30% for the fourth time in the past five weeks.

Sentiment remains upbeat, as individual investors are hopeful about the short-term direction of prices. Even though many are optimistic, individual investors still remain concerned about the pace of economic growth, Washington politics and the European sovereign debt crisis.

This week's special question asked AAII members if they are taking on more risk (investing more aggressively), less risk (investing more conservatively) or keeping their risk exposure about the same as six months ago. The largest number of respondents said they were keeping their risk exposure unchanged. Investing more conservatively and investing more aggressively ranked second and third in terms of the number of responses.

Here is a sampling of the responses:

• "About the same. I try to keep a balanced portfolio with stocks, stock funds and bonds."
• "No change. I see a lot of positives, but I still feel something big and negative will happen to counteract the positives."
• "Same, but I'm more relaxed. The market seems to have baked in the European and Congressional stalemates. It is not as skittish as it was from August forward in 2011."
• "Less risk. The market is just too erratic and scary at this time."
• "I am investing with a little more risk, as I feel that we will experience a slow but improving world economy."

This week's AAII Sentiment Survey results:

• Bullish: 47.2%, down 1.9 percentage points
• Neutral: 29.2%, down 4.5 percentage points
• Bearish: 23.6%, up 6.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 12, 2012

Bullish sentiment edged up slightly, while bearish sentiment stayed at unusually low levels in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.3 percentage points to 49.1%. This is the highest level of optimism registered by the survey since February 10, 2011, when bullish sentiment reached 49.4%. The historic average is 39%.

Neutral sentiment, expectations that stock prices will remain unchanged over the next six months, slipped 0.3 percentage points to 33.7%. Even with the decrease, neutral sentiment is above its historical average of 31% for the third time in the past four weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, was unchanged at 17.2%. Pessimism not only stayed at its lowest level since December 23, 2010, it also remained at a reading that is more than one standard deviation below the historical average of 30%.

The positive start to 2012 is keeping individual investors hopeful about the short-term direction of stock prices. The survey results also continue to reflect an overall improvement in moods with bullish sentiment now above its historical average for nine out of the last 14 weeks. Even with the improvement in sentiment, individual investors still remain concerned about the pace of economic growth, Washington politics and the European sovereign debt crisis.

This week's AAII Sentiment Survey results:

• Bullish: 49.1%, up 0.3 percentage points
• Neutral: 33.7%, down 0.3 percentage points
• Bearish: 17.2%, unchanged

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 5, 2012

Bullish sentiment soared to an 11-month high in the latest AAII Sentiment Survey. Bearish sentiment plunged to levels not seen since December 2010.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.3 percentage points to 48.9%. This is the highest level of optimism since February 10, 2011. It is also the third time in the past four weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, rose 5.4 percentage points to 34.0%. This is the second time in three weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 13.7 percentage points to 17.2%. This is the lowest level of pessimism since December 23, 2010. It is also more than one standard deviation below the historical average of 30%, making this an unusually low reading.

AAII members are starting the new year with optimism about the short-term direction of stock prices. Whether this positive outlook holds remains to be seen, as many individual investors are concerned about the slow pace of economic growth, Washington politics and the European sovereign debt crisis. There has been a gradual improvement in individual investors' outlook, however, with bullish sentiment posting above-average readings during eight out of the past 13 weeks, after having stayed at below average levels for 27 out 33 weeks.

This week's special question asked AAII members whether large-cap, mid-cap, small-cap or micro-cap stocks will perform best this year. The majority of respondents said large-cap stocks, especially those that pay dividends, will deliver the best returns. Mid-cap stocks were a distant second, followed by small-cap stocks.

Here is a sampling of the responses:

• "We're in a negative environment where investors feel more comfortable in bigger companies with stability. Those stocks that pay dividends will be in favor."
• "Large-cap stocks due to their global reach and dividends; people view them as safe."
• "Large-cap stocks. Dividends and safety matter. Exposure to emerging markets can be attained through high-quality large-cap stocks."
• "Mid-cap stocks. They have better growth than small caps since they have more access to capital. Large caps still need the global economy to be more robust."
• "Small- and micro-cap stocks, because they are the most undervalued and usually lead the market in an economic recovery."

This week's AAII Sentiment Survey results:

• Bullish: 48.9%, up 8.3 percentage points
• Neutral: 34.0%, up 5.4 percentage points
• Bearish: 17.2%, down 13.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 29, 2011

A Santa Claus rally helped to lift individual investor sentiment from a neutral stance to a predominately bullish stance in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 6.9 percentage points to 40.6%. This is a six-week high for bullish sentiment and is above the historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, fell 9.4 percentage points to 28.6%. Neutral sentiment hit a six-year high last week, and this week's large decline pushed the neutral sentiment reading back below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased slightly by 2.6 percentage points to 30.8%. Bearish sentiment has been above its historical average of 30% six times over the last seven weeks.

Many individual investors are encouraged by the improving domestic economic picture, but remain cautious and concerned about the European sovereign debt problems.

This week's special question asked AAII members if there were any economic or market-related catalysts they might be looking for over the next few months. Most respondents focused on Europe, with bullish investors looking toward a stabilization or semi-resolution of the eurozone debt problems as positive catalysts, while bearish investors expect a breakup of the European Common Market that will hurt the domestic economy and the markets. On the domestic front, a number of respondents cited an improving domestic employment picture, strong consumer spending and an improving housing market as key economic catalysts.

Here is a sampling of the responses:

• "I am looking for the breakup of the European Common Market, which will affect our economy in a negative way."
• "I think that for the next few months, news from Europe will continue to move the markets in a seesaw fashion. By comparison, important numbers like GDP and employment will have a muted effect."
• "I am looking for a slowly improving economy and a final resolution to the European debt crisis."
• "Improvements in unemployment, housing starts, existing home sales, industrial production, energy prices and exports."
• "A large increase in consumer spending."
• "An increase in domestic energy production."

This week's AAII Sentiment Survey results:

• Bullish: 40.6%, up 6.9 percentage points
• Neutral: 28.6%, down 9.4 percentage points
• Bearish: 30.8%, up 2.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 22, 2011

Neutral sentiment rose to its highest level since 2005 in the latest AAII Sentiment Survey, as both bullish and bearish sentiment fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, dropped 6.5 percentage points to 33.7%. This is a four-week low. It is also the fifth time in the past six weeks that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, jumped 11.9 percentage points to 38.0%. This is the highest neutral sentiment has been since April 14, 2005. It is also just the second time in the past 22 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.4 percentage points to 28.2%. This is the first time in six weeks that bearish sentiment has been below its historical average of 30%.

Though this week's neutral sentiment reading is unusually high by recent standards, it remains within its long-term historical range. Neutral sentiment exceeded 40% at least once every year between 1989 and 2005. It has only been over the past six years that the percentage of individual investors expecting a flat market has stayed at lower levels.

Many individual investors remain cautious, and/or frustrated, due to ongoing market volatility and headline risk. European sovereign debt problems, Washington politics and slow economic growth are all weighing on sentiment.

This week's special question asked AAII members how they thought the S&P 500 will perform in 2012. Respondents expecting an up year outnumbered those expecting a down year by a margin of three to one. Expectations were modest, however, with more of than half of those predicting gains saying the S&P 500 will rise by 10% or less. (Many projected a full-year increase of 5% to 10%.) A notable number of AAII members predicted a rise between 12% and 15% or a drop of 5%. A continuation of volatility was a common theme, even among those who were looking for the stocks to ultimately rise over the course of 2012.

This week's AAII Sentiment Survey results:

• Bullish: 33.7%; down 6.5 percentage points
• Neutral: 38.0%; up 11.9 percentage points
• Bearish: 28.2%; down 5.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 15, 2011

Bullish sentiment rebounded to its first above-average reading since mid-November in the latest AAII Sentiment Survey. Bearish sentiment fell, but it continues to stay above its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.6 percentage points to 40.2%. This is the third consecutive weekly increase in optimism. It is also the first time since November 17, 2011 that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, declined 0.5 percentage points to 26.2%. This was the third consecutive weekly decrease. It is also the 21st time in the past 22 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.1 percentage points to 33.6%, a four-week low. Even with the decrease, bearish sentiment stayed above its historical average of 30% for the 5th consecutive week and the 37th out of the past 43 weeks.

Though there has been an improvement in bullish sentiment over the past few weeks, many investors remain cautious, and frustrated. Ongoing market volatility, slow economic growth, European sovereign debt problems and Washington politics are all continuing to fray nerves. Whether the current rise in bullish sentiment signals a turning point remains to be seen, particularly since optimism has not stayed above its historical average for a period of longer than four weeks since last February.

This week's special question asked AAII members what impact, if any, a possible extension of the payroll tax cut into 2012 would have on their six-month outlook for stocks. The majority of respondents said an extension would have no impact or just a small, though positive, impact. There were many members, however, who thought an extension would help stock prices.

Here is a sampling of the responses:

• "The payroll tax cut will have no impact on stocks."
• "None really, except that I think an extension would be helpful for consumer behavior."
• "If the tax cut is not extended, then I expect the market to decline, on expectations of lower earnings going forward."
• "An extension would be a slight positive for the market, with people having more money in their pockets to spend or pay down debt."
• "An extension would help the economy by increasing purchasing power. An improved economy should increase the value of stocks."

This week's AAII Sentiment Survey results:

• Bullish: 40.2%; up 1.6 percentage points
• Neutral: 26.2%; down 0.5 percentage points
• Bearish: 33.6%; down 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 8, 2011

Bullish sentiment rebounded in the latest AAII Sentiment Survey, but bearish sentiment stayed above average for the fourth consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded 5.5 percentage points to 38.6%. Even with the improvement, optimism remained below its historical average of 39% for the third consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 0.9 percentage points to 26.7%. This is an eight-week low for neutral sentiment. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 4.7 percentage points to 34.8%. Even with the decrease, this is the fourth consecutive week, and the 36th out of 42, that bearish sentiment has been above its historical average of 30%.

The ongoing market volatility, combined with slow economic growth, the European sovereign debt crisis and Washington politics, continues to leave many AAII members frustrated and cautious. Improvements in optimism this year have proven to be fragile in part due to the headline-driven nature of the current market climate. It should also be noted that many individual investors have responded by becoming more conservative with their portfolio allocations, as was evident in our November Asset Allocation Survey.

This week's special question asked about last week's coordinated central bank move to provide liquidity support to Europe. Specifically, we asked if AAII members if the announcement made them more or less optimistic that the events in Europe won't negatively impact the U.S. economy. Responses were split with the largest number of respondents saying they were less optimistic.

Here is sampling of the responses:

• "Less optimistic. I have seen no evidence to date that the European leaders know what to do to reduce the effects of a debt de-leveraging cycle."
• "I'm less optimistic because such a move implies that the credit markets were very close to freezing up."
• "Neither. I think the underlying problem of too much debt remains unaddressed."
• "I'm a little more optimistic."

This week's AAII Sentiment Survey Results:

• Bullish: 38.6%, up 5.5 percentage points
• Neutral: 26.7%, down 0.9 percentage points
• Bearish: 34.8%, down 4.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 1, 2011

Bearish sentiment neared a two-month high in the latest AAII Sentiment Survey, while bullish sentiment remained below average.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.3 percentage points to 33.0%. This is the second consecutive week that optimism has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, fell 1.5 percentage points to 27.5%. This is the 19th time in the past 20 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 39.4%. This is the highest level of pessimism since October 6, 2011. This is also the third consecutive week that bearish sentiment has been above its historical average of 30%.

Due to the timing of our survey (Thursday through Wednesday), it is too early to tell if Wednesday's coordinated central bank action and the resulting rally have affected individual investor sentiment . The longer trends show a lasting cautiousness on the part of individual investors with bearish sentiment registering above-average readings for 35 out of the past 41 weeks. (The level of bearish sentiment exceeded the level of bullish sentiment 18 times during that period.) Market volatility, slow economic growth, European sovereign debt problems and Washington politics are all adversely impacting individual investors' moods.

This week's sentiment survey ask AAII members how, if at all, the congressional super committee's failure to reach a compromise on a long-term deficit reduction plan affected their sentiment towards stocks. The majority of respondents said that it didn't have an impact, though many had expected the committee to fail. A sizeable minority said the lack of compromise made them more bearish.

Here is a sampling of the responses:

• "I never figured the super committee would achieve anything, so I am just staying the course (with my investments)."
• "This was all political theater. It was never intended to reduce the deficit, so it had no change on my outlook about the direction of the market."
• "No impact. I believe the lack of any compromise coming from this special congressional committee was already priced in."
• "Definitely a negative. I can't have much faith in our economy when our government officials can't accomplish the goals mandated by to them by law."
• "Neither U.S. nor European Union 'leaders' seem capable of managing their responsibilities. I am angry at them and fearful for our economies."

This week's AAII Sentiment Survey results:

• Bullish: 33.0%, up 0.3 percentage points
• Neutral: 27.5%, down 1.5 percentage points
• Bearish: 39.4%, up 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 17, 2011

Bullish sentiment stayed above 40% for the fourth consecutive week but bearish sentiment rebounded in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 2.8 percentage points, to 41.9%. Nonetheless, this was the first time optimism has stayed above 40% for four consecutive weeks since February 2011. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 3.7 percentage points to 27.0%. This is the 17th time in the past 18 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 6.5 percentage points to 31.0%. This was the first time in four weeks that pessimism has been above its historical average of 30%.

AAII members continue to be more upbeat about the six-month direction of stocks prices than they were in August and September. Optimism remains cautious, however, as is evidenced by the bullish sentiment reading. The slow level of U.S. economic growth, Europe's sovereign debt crisis, Washington politics and the market's daily volatility are combining to keep confidence at historically modest modest levels, and the nerves of some individual investors are frayed.

This week's special question asked AAII members what sectors and industries they currently like. Oil and technology tied as the favorites. Health care and utilities tied for second, followed by consumer staples. When the same question was asked in August, members said they liked energy, basic materials/commodities, health care, utilities and technology.

This week's AAII Sentiment Survey:

• Bullish: 41.9%, down 2.8 percentage points
• Neutral: 27.0%, down 3.7 percentage points
• Bearish: 31.0%, up 6.5 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 10, 2011

Bullish sentiment rebounded, while bearish sentiment fell to a level not seen since last January in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.6 percentage points to 44.7%. This is the highest percentage of optimism since February 17, 2011. This is also the third consecutive week that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, edged up 0.5 percentage points to 30.7%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.1 percentage points to 24.6%. This is the lowest level of pessimism since January 13, 2011. Bearish sentiment has now been below its historical average for three consecutive weeks.

Many respondents took this week's survey before yesterday's 389-point drop in the Dow. Thus the results reflect optimism caused by the rebound that stock prices had been experiencing. Even with the improvement in bullish sentiment, individual investors remain cautious, however, given the events in Europe, the slow level of U.S. economic growth, and Washington politics.

In honor of this week's AAII Conference, which is being held in Las Vegas, we asked AAII members who their favorite Vegas act was (past or present). Elvis Presley and Circ de Soleil received the most votes.

This week's AAII Sentiment Survey results:

• Bullish: 44.7%, up 4.6 percentage points
• Neutral: 30.7%, up 0.5 percentage points
• Bearish: 24.6%, down 5.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 3, 2011

Both optimism and pessimism about the short-term direction of stock prices were near their historical averages in this week's AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.8 percentage points to 40.2%. Even with the drop, this marks the third time in four weeks that bullish sentiment is above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.8 percentage points to 30.2%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded 4.6 percentage points to 29.6%. Even with the increase, pessimism stayed below its historical average of 30% for the second consecutive week.

This is the first time since July 2011 when we have had consecutive weeks of above-average bullish sentiment and below-average bearish sentiment. Though marking an improvement in attitudes to toward the market, it is important to note that both readings are very close to their historical averages. The ongoing European debt crisis, slow domestic economic growth and frustration with Washington politics are all keeping individual investors cautious.

This week's special question asked AAII members how the developments with European sovereign debt are affecting their sentiment toward stocks. The majority of respondents said that the situation in Europe was having a negative impact, that they were avoiding European stocks, or both. Several members expressed an aversion to foreign stocks, echoing comments made in last month's AAII Asset Allocation Survey. A few members, however, said they were finding opportunities in emerging market securities.

Here is a sampling of the responses:

• "European sovereign debt will incur more uncertainty and will negatively affect the U.S. and global markets, especially the European markets."
• "The problems are still not resolved in my opinion. So, I'm staying away from Europe."
• "I stay away from global stocks. I do invest in U.S. companies that have a global reach."
• "I am staying with what I currently own; I'm not taking new positions or adding to those already in the portfolio. The European Union has not dealt with Italy, Spain, Portugal or Ireland."
• "Scare stories from Europe are providing opportunities to invest in global stocks, which are cheap—especially emerging market stocks."

This week's AAII Sentiment Survey results:

• Bullish: 40.2%, down 2.8 percentage points
• Neutral: 30.2%, down 1.8 percentage points
• Bearish: 29.6%, up 4.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 27, 2011

Bullish sentiment, expectations that stock prices will rise over the next six months, reached a six-month high in the latest AAII Sentiment Survey. Optimism jumped 7.0 percentage points to 43.0%. This is the second time in three weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.6 percentage points to 32.0%. This is the first time in 15 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.6 percentage points to 25.0%. This is the lowest level of pessimism since July 7, 2011. Bearish sentiment had been above its historical average of 30% for the previous 14 consecutive weeks.

This week's numbers are a significant change from the trends we have been. Bullish sentiment is above average for only the fifth time out of the last 28 weeks. Bearish sentiment is below average for only the fourth time in the past 36 weeks. The spread between bullish and bearish sentiment (the bull/bear spread) is the most positive it has been since February 17, 2011.

Whether this is a distinguishing change in sentiment or just a temporary shift remains to be seen. Pessimism has declined for five consecutive weeks as October's rebound in stock prices has helped to calm nerves. On the other hand, individual investors remain concerned about the pace of economic growth, the gridlock in Washington and European sovereign debt. (This week's survey was completed before this morning’s announcement from Europe.) Thus, the optimism signal in this week's survey is a cautious optimism.

This week's special question asked AAII members whether they are looking at value, growth or dividend stocks. The overwhelming majority of respondents said they were looking at dividend stocks. Many cited the comparatively higher yields or the cushion against volatile market conditions that dividends offer. A small group expressed a preference for either growth or value stocks, and some said they were currently avoiding stocks altogether.

Here is a sampling of the responses:

• "Dividend-paying, so I can at least get paid while waiting for an upward market move."
• "Dividend-paying stocks. I am retired and looking for income. In addition, these seem to be the safest segment of the market."
• "Dividend-paying. They are better than CDs, interest on banking accounts, and many bonds."
• "I have been interested in dividend stocks for almost two years. They provide a steady source of income, even in a very unpredictable market."
• "Dividend. Yields on these stocks seem attractive."

This week's AAII Sentiment Survey results:

• Bullish: 43.0%, up 7.0 percentage points
• Neutral: 32.0%, up 2.6 percentage points
• Bearish: 25.0%, down 9.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 20, 2011

Bullish sentiment fell 3.8 percentage points to 36.0% in the latest AAII Sentiment Survey. The percentage of individual investors expecting stock prices to rise over the next six months dipped back below the historical average of 39.0%, after rising above it last week for the first time in 12 weeks. Bullish sentiment has now been below its historical average of 39% for 23 out of the last 27 weeks.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, jumped 5.5 percentage points to 29.4%. This is a six-week high. Even with the improvement, neutral sentiment stayed below its historical average of 31% for the 14th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.8 percentage points to 34.6%. This is the fourth consecutive week that pessimism has decreased. Even with the drop, bearish sentiment remained above its historical average of 30% for the 32nd time in the past 35 weeks.

AAII members have become less glum about the short-term outlook for stocks over the past few weeks. This is particularly evident in the bull-bear spread (bullish sentiment minus bearish sentiment), which is positive for the second consecutive week. Optimism is cautious, at best, as concerns about the economy, Washington and European sovereign debt weigh on individual investors' moods.

This week's special question asked AAII members if this year's holiday shopping season will be better or worse than last year's. (The National Retail Federation forecasts holiday sales will rise 2.8%.) Responses were evenly split between those who predict consumers will spend more and those who expect less holiday spending. (A smaller group thought sales would be flat.) Those who are optimistic cited pent-up demand, greater confidence among those who have jobs and the recent returns charted by retail stocks. Those who are pessimistic cite high unemployment, economic uncertainty and rising living costs.

Here is a sampling of the responses.

• "More holiday spending. If you have a job, life isn't bad and people held back during the last two years."
• "More spending. I was in a major toy retailer's store this past week and was surprised by the high level of activity."
• "Consumers will spend less because of the weak economy."
• "With so many people unemployed and living expenses that have increased, I can't see money being spent that people don't have."
• "Since incomes are stagnant for those who have jobs, I think holiday sales will be about the same as last year."

This week's AAII Sentiment Survey results:

• Bullish: 36.0%, down 3.8 percentage points
• Neutral: 29.4%, up 5.5 percentage points
• Bearish: 34.6%, down 1.8 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 13, 2011

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 4.5 percentage points to 39.8%. This is the highest level of optimism since July 21, 2011. It also ends a streak of 11 weeks when bullish sentiment was below its historical average of 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, rose 4.8 percentage points to 23.9%. This was the 13th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.4 percentage points to 36.4%. This is a six-week low for pessimism. It is also only the third time in the past 11 weeks that bearish sentiment has been below 40%. Despite this week's decrease, pessimism is above its historical average of 30% for the 31st time out of the last 34 weeks.

The Dow Jones Industrial Average has jumped 8% higher from its October 3 close, and this rebound has alleviated some of the pessimism. Though a greater percentage of investors are looking for stocks to rise over the next six months, AAII members remain very cautious, as is evident by the above-average level of bearish sentiment. The pace of economic growth, worries about European sovereign debt, frustration with Washington and volatile market conditions are weighing on individual investors' moods.

This week's special question asked AAII members if they have recently begun bargain shopping for stocks. The majority of respondents said they had not. Several, however, said they would consider bargain shopping if prices fell by an additional 10% to 20%. Others were either waiting on factors beside price movement or simply had no intentions of buying stocks right now. A sizeable minority, however, said they have recently been bargain shopping for stocks.

Here is a sampling of the responses:

• "No. Nothing has been resolved in Europe, and I expect lower guidance from U.S. companies."
• "I am not bargain hunting because the market will be down a lot in six months."
• "I am looking, but I will not be buying without another drop of 5% to 15%."
• "I have a cash position of more than 20% and will invest in stocks when they drop 10% from current levels."
• "No hunting yet, but I will soon be scouting the grounds for trophy picks."
• "I started in July and have been buying stocks ever since then."

This week's AAII Sentiment Survey results:

• Bullish: 39.8%, up 4.5 percentage points
• Neutral: 23.9%, up 4.8 percentage points
• Bearish: 36.4%, down 9.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 6, 2011

Bullish sentiment rebounded to a five-week high in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months rose 2.7 percentage points to 35.2%. Even with the improvement, bullish sentiment remained below its historical average of 39% for the 11th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially flat, fell 1.6 percentage points to 19.0%. This is the lowest level of neutral sentiment since November 11, 2010.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.1 percentage points to 45.7%. This was the eighth time in the past 10 weeks that bearish sentiment has been above 40%. It is also the 30th time out of the last 33 weeks that bearish sentiment has been above its historical average of 30%.

Individual investors continue to fret about the direction of stock prices. Concerns about the pace of economic growth, worries about European sovereign debt, frustration with Washington and volatile market conditions are combining to keep bearish sentiment at historically high levels.

This week's special question asked AAII members where they foresee the U.S. economy headed over the next six months. The majority of respondents thought the economy would expand, albeit at a slow pace. A minority are expecting the U.S. to fall into a double-dip recession, while a few believe the pace of economic expansion will accelerate.

Here is a sampling of the responses:

• "I expect continued slow growth until the fiscal uncertainties are clarified."
• "I suspect no growth on average, with minor ups and downs while the Congressional deadlock continues."
• "Slow growth that could morph into a double-dip recession if the European situation is not resolved."
• "I think we will have continued slow growth while Washington dithers."
• "Definitely slow to no growth, with a double-dip recession coming."

This week's AAII Sentiment Survey results:

• Bullish: 35.2%, up 2.7 percentage points
• Neutral: 19.0%, down 1.6 percentage points
• Bearish: 45.7%, down 1.1 percentage points

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 29, 2011

Investor sentiment continues to be to be bearish on the outlook of the market six months out, but a higher percentage of investors are bullish this week in the latest AAII Sentiment Survey. Bullish sentiment among individual investors increased 7.2 percentage points to 32.5%. The increase was the highest single-week jump in the bullish reading since the middle of June. The weekly sentiment reading of investors expecting stock prices to rise over the next six months continues to be below its long-term average of 39%. Bullish sentiment has measured below its historical average for 10 consecutive weeks.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 6.0 percentage points to 20.7%. This is the 11th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.2 percentage points to 46.8%. This was the seventh time in the past nine weeks that bearish sentiment has been above 40%. It is also the 29th time out of the last 32 weeks that bearish sentiment has been above its historical average of 30%. While bearish sentiment declined, it remains more than one standard deviation above its long-term average.

This week's AAII Sentiment Survey results:

• Bullish: 32.5%, up 7.2 percentage points
• Neutral: 20.7%, down 6.0 percentage points
• Bearish: 46.8%, down 1.2 percentage points

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 22. 2011

Investor sentiment continued its pessimistic slide in the latest AAII survey of individual investors. Bullish sentiment decreased 5.2 percentage points to 25.3%. The percentage of investors expecting stock prices to rise over the next six months is 13.7 percentage points below the long-term historical average of 39%. Bullish sentiment has been below its historical average for nine consecutive weeks and has been below the historical average 20 times over the last 23 weeks.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 1.5 percentage points to 26.7%. This is the tenth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 6.7 percentage points to 48.0%. This was the sixth time in the past eight weeks that bearish sentiment has been above 40%. It is also the 28th time in the last 31 weeks that bearish sentiment has been above its historical average of 30%.

The numbers show growing pessimism among individual investors. Both bearish and bullish sentiment readings are more than one standard deviation away from their long-term averages. Bearish sentiment is more than one standard deviation above its average of 30%, while bullish sentiment is more than one standard deviation below its 39% long-term average.

This week's special question asked AAII members if the Greek sovereign debt situation was influencing their investing decisions. Specifically, we asked if members had taken any investment actions because of the Greek debt situation, whether they were waiting to see if the country defaults or looking for bargains in European stocks. The responses varied widely, with some respondents expecting a successful resolution to the Greek debt crisis and others anticipating a Greek default. Some investors are using the pessimistic environment to snap up bargains, while others are holding more cash and bonds than usual until there is a true resolution to the Greek debt crisis. Most respondents seem to be monitoring the situation without letting it impact their investment decisions.

Here is a sampling of the responses to this week's special question.

• "I am monitoring the Greek situation, but it is not affecting my decisions at this point."
• "It's just the tip of the iceberg in Europe. The situation in Europe could blow up and make the market collapse of 2008 look small by comparison."
• "Europe has deep-seated structural problems well beyond Greece. I am not buying European stocks."
• "Who wants to catch the falling European knife?"
• "I am looking for more bargains in U.S. stocks that are just down because of the European uncertainty."
• "Looking for bargains in European stocks. Greece is going to default sooner or later. But not all European companies should be painted with the same brush."
• "Greece? Wasn't that a Movie Title?"

This week's AAII Sentiment Survey results:

• Bullish: 25.3%, down 5.2 percentage points
• Neutral: 26.7%, down 1.5 percentage points
• Bearish: 48.0%, up 6.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 15. 2011

Bullish sentiment increased 0.3 percentage points to 30.5% in the latest AAII Sentiment Survey. The slight change kept optimism that stock prices will rise over the next six months below its historical average of 39% for the eighth consecutive week. This was also the 19th time in 22 weeks that optimism has been below average.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 1.3 percentage points to 28.2%. This is the ninth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 41.3%. This was the fifth time in the past nine weeks that bearish sentiment has been above 40%. It is also the 27th time out of the last 30 weeks that bearish sentiment has been above its historical average of 30%.

The numbers show continued pessimism on the part of individual investors. Bearish sentiment is back to being more than one standard deviation above average, making it unusually high, but not extraordinarily so. Bullish sentiment, though below average, is not yet at levels that would make it usually low, however.

The pessimism is a continued reaction to the negative headlines. Individual investors are concerned about the volatility in stock prices, the slow pace of economic growth, sovereign debt concerns (both in the U.S. and in Europe) and Washington politics.

This week's special question asked AAII members about their longer-term outlook for stocks. Specifically, we asked whether stocks had more potential upside or downside over the next 12 to 24 months. The majority of respondents thought stocks had more potential upside, though a sizeable minority anticipated more downside. Many predicted continued volatility, even those who anticipated stocks to show gains or losses.

Several members pointed to next year's presidential election as a potential catalyst. (How the election results will affect stocks depended on the member's political bias.) Other members thought cited the level of fear about the U.S. economy and European sovereign debt, overseas profit growth, sovereign debt problems (including U.S. debt) and the economy as factors affecting their outlook.

When we asked the same question last April, the responses were divided, with slightly more AAII members anticipating a further rise in stocks prices over the next 12 to 24 months than those who thought stock prices will fall.

Here is a sampling of the responses to this week's special question.

• "I don't think the world is going to end, so I expect more upside than downside despite mediocre to little growth in developed markets."
• "It does seem that, longer term, stocks are cheap. If another full-blown recession can be avoided, stocks should be higher in the long term."
• "I expect generally more upside, but there are so many events that will steer the market sharply down."
• "More volatility ahead. I anticipate spurts, both up and down."
• "More downside. European and U.S. debt problems combined with the inability to tackle financial commitments will weigh economic opportunity down."
• "The longer-term prognosis will depend on the 2012 election."

This week's AAII Sentiment Survey results:

• Bullish: 30.5%, up 0.3 percentage points
• Neutral: 28.2%, down 1.3 percentage points
• Bearish: 41.3%, up 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 8. 2011

Individual investor sentiment turned bearish after the holiday weekend. Bullish sentiment declined 8.4 percentage points over the last week. The percentage of individual investors who expect stock prices to rise over the next six months measured 30.2% this week, reversing a four-week trend of steady weekly increases in bullish sentiment. Bullish sentiment is now 8.8 percentage points below its historical average of 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, increased 0.5 percentage points to 29.5%. Neutral sentiment has been below its historical average of 31% for eight consecutive weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, climbed by 8.0 percentage points to 40.3%. Bearish sentiment has been above its historical average of 30% for eight straight weeks, and it has been above its historical average for 26 out of the last 29 weekly readings.

All of the sentiment readings are now within a few percentage points of their long-term averages.

This week's special question asked AAII members if there are any economic or market-related catalysts they are looking for over the next few months. Many respondents discussed the need for improvement in the employment environment, but said they were frustrated by gridlock and partisan politics in Washington. Investors expressed some hope that the Fed will help strengthen the U.S. economy if it continues to weaken, while stating that European central banks need to work to resolve the financial crisis abroad. A few respondents expressed little hope, and stated that they expect a collapse of the dollar or the euro.

Here is a sampling of the responses:

• "I am looking for Congress to set aside partisan politics and start leading the country forward, not left or right. Just lead, and the people and the economy and the markets will follow."
• "An improvement in employment numbers is what I am looking for. But since Congress doesn't seem to be interested in job creation, I will continue my 'little risk, little reward' investment strategy."
• "Job creation. We need Americans to be employed."
• "The key to a recovery is improvement in the foreclosure rate and housing market."
• "I'm expecting the Fed to save the day, like always."
• "Resolution of Europe's financial crisis and U.S. development of a manageable debt-reduction plan."
• "More jobs!!!!!!!!"

This week's AAII Sentiment Survey results:

• Bullish: 30.2%, down 8.4
• Neutral: 29.5%, up 0.5
• Bearish: 40.3%, up 8.0

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 1. 2011

The latest AAII Sentiment Survey reveals that bullish sentiment among individual investors has exceeded bearish sentiment for the first time since the end of July. The percentage of individual investors who expect stock prices to rise over the next six months continued its slow upward climb, up 2.2% to a six-week high of 38.6%. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, increased 6.4 percentage points to 29.0%. Even with the strong upward bump this week, neutral sentiment has been below its historical average of 31% for seven consecutive weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped by 8.6 percentage points to 32.3%. While this is the 25th time in 28 weeks that pessimism has been above its historical average of 30%, the 8.6 percentage point drop is the largest single week decline in bearish sentiment since December 23, 2010.

All of the sentiment readings are now within a few percentage points of their long-term averages.

This week's special question asked AAII members how much, if any, margin of error they were factoring into third- and fourth-quarter earnings estimates. Many respondents thought analyst forecasts were between 5% and 20% too high. Others thought the profit projections would be pretty close to the actual results. Some individual investors thought the estimates would end up being wrong, but were unsure by how much.

Here is a sampling of the responses:

• "I believe they are 10% to 15% too high. Analysts will soon start revising forecasts down."
• "The earnings forecasts have been too optimistic and are not taking into account the recent downtrend."
• "I don't usually put a percentage on the error, but I always assume earnings estimates are on the high end."
• "Analysts will be wrong for sure, but I'm not smart enough to know which way."
• "Typically, analysts miss actual earnings 70% of the time. I don't pay much attention to earnings estimates any more."

This week's AAII Sentiment Survey results:

• Bullish: 38.6%, up 2.2
• Neutral: 29.0%, up 6.4
• Bearish: 32.3%, down 8.6

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 25. 2011

Bullish sentiment slightly improved in the latest AAII Sentiment Survey. The percentage of individual investors who expect stock prices to rise over the next six months edged up 0.9% to a four-week high of 36.4%. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 2.0 percentage points to 22.6%. This is the sixth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 1.1 percentage points to 41.0%. This is the 24th time in 27 weeks that pessimism has been above its historical average of 30%.

Bearish sentiment has been at or above 41% during three out of the last four weeks, equaling or exceeding one standard deviation above the average. This puts pessimism at high, but not excessive levels. The numbers show continued uncertainty on the part of individual investors about where stock prices are headed. Market volatility, the slow pace of economic growth and sovereign debt concerns (both in the U.S. and in Europe) are all playing a role. The increase in bullish sentiment, however, shows that some individual investors believe that the selling pressure has made the prices of certain stocks attractive.

This week's special question asked AAII members what, if anything, they have done in reaction to this month's volatility. Answers varied, though the largest number of respondents said they bought stocks. The second-most common response was that individual investors are looking for bargains among stocks. Making no changes to came in third. A small number said they either sold stocks or were holding more cash (with proceeds coming from the selling of stocks, bonds, gold or short positions).

Here is a sampling of the responses:

• "Yes, I bought some stocks. I like things on sale!"
• "I've picked up a couple of bargains and am considering adding to my long-term holdings."
• "I have taken advantage of the drop in prices to execute buys for stocks on my watch list. For many of these buys, the dividend yield is at 5%."
• "Not much. I've looked for bargains and nibbled at one, but I am still waiting for better valuations to come."
• "I have paid less attention to the markets and done nothing with my holdings. I am confident that stocks will rebound strongly later this year."
• "I've gotten out of stocks and am battening down the hatchets."

This week's AAII Sentiment Survey results:

• Bullish: 36.4%, up 0.9
• Neutral: 22.6%, down 2.0
• Bearish: 41.0%, up 1.1

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 18. 2011

Bullish sentiment rose 2.1 percentage points to 35.6% in the latest AAII Sentiment Survey. This is the second consecutive weekly increase in optimism that stock prices will rise over the next six months. Despite the improvement, bullish sentiment remains below its historical average of 39% for the fourth week in a row.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, rose 2.8 percentage points to 24.6%. This is the fifth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped 5.0 percentage points to 39.8%. This was the second consecutive weekly decrease in pessimism. Even with the drop, bearish sentiment is above its historical average of 30% for the 23rd time in 26 weeks.

The level of pessimism continues to pull back from the 2011 high recorded two weeks ago. Even with the improvement in optimism. a higher percentage of individual investors still expect stock prices to fall over the next six months than those who expect prices to rise. The recent volatility in the markets has created additional uncertainty. This is in addition to the problematic headline risk caused by the slow pace of economic growth and sovereign debt issues (both in the U.S. and in Europe).

This week's special question asked AAII members which sectors or industries they like right now. Energy was the overwhelming favorite. AAII members also expressed a preference for basic materials/commodities, health care, utilities and technology. Many explicitly said they were seeking out dividend-paying stocks.

When the same question was asked in late May, AAII members said they liked energy, health care and technology.

This week's AAII Sentiment Survey results:

• Bullish: 35.6%, up 2.1 percentage points
• Neutral: 24.6%, up 2.8 percentage points
• Bearish: 39.8%, down 5.0 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 11. 2011

Bullish sentiment rebounded 6.3 percentage points to 33.4% in the latest AAII Sentiment Survey. Even with the improvement. optimism that stock prices will rise over the next six months remained below its historical average of 39% for the 14th time in the last 17 weeks.

Neutral sentiment. expectations that stock prices will stay essentially unchanged over the next six months. fell 1.2 percentage points to 21.8%. This is the lowest neutral sentiment has been since February 3. 2011. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. dropped 5.1 percentage points to 44.8%. This is the 22nd time in the past 25 weeks that bearish sentiment has been above its historical average of 30%.

Even with this week's decline. bearish sentiment remains at high. though not excessive. levels. Pessimism is more than one standard deviation above its historical average. which makes it unusual. but not extraordinary.

The high level of pessimism shows that individual investors remain worried that stock prices could fall further. The improvement in bullish sentiment does signal that some believe the brunt of the recent declines is over (or is nearing an end). however. Headline risk remains problematic. especially with many individual investors previously concerned about the pace of economic growth and the federal deficit. prior to the start of the current market correction.

This week's special question asked if the Federal Reserve or the President/Congress should introduce new stimulus to accelerate growth. and if so. what type (e.g.. buy more Treasuries. spend on infrastructure. extend the payroll tax cut). AAII members responded with a variety of ideas. The most popular were spending on infrastructure. extending the payroll tax holiday and reforming taxes and/or lowering them.

A minority said the government should not provide any additional stimulus. The deficit and a sense that prior stimulus has not worked were commonly listed as reasons for objecting. Some members thought the government should cut spending.

This week's AAII Sentiment Survey results:

• Bullish: 33.4%. up 6.3 percentage points
• Neutral: 21.8%. down 1.2 percentage points
• Bearish: 44.8%. down 5.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 4. 2011

Bullish sentiment plunged 10.7 percentage points in the latest AAII Sentiment Survey. The proportion of individual investors who expect stock prices to rise over the next six months fell to 27.2%. an eight-week low. The historical average is 39%.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. dropped 7.8 percentage points to 23.0%. This is the lowest neutral sentiment has been since February 3. 2011. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. surged 18.4 percentage points to 49.9%. This is the highest level of pessimism since May 27. 2010 and the biggest weekly percentage point increase since July 20. 2006. It is also the 21st time in the 24 weeks that bearish sentiment has been above its historical average of 30%.

There was a large amount of headline risk throughout the survey period. Events contributing to the negative sentiment included the debt ceiling debate. weak economic data such as second-quarter GDP and the July ISM manufacturing survey. and a eight-day losing streak for the Dow Jones Industrial Average. Many individual investors already had concerns about the pace of economic growth. so it is not surprising to see their nerves rattled by the negative headlines.

At current levels. bearish sentiment is unusually high. but not extraordinarily so. Two standard deviations above the historical average is 50.7%. and levels above that mark are outliers.

This week's special question asked AAII members what impact. if any. the debt ceiling debate has had on U.S. economic growth. The majority of respondents said that the debate had a negative impact. though many thought it had little or no impact. There was a large variance in the comments with many expressing frustration at politicians and the political process. Some thought the debate and the lack of a long-term solution has created uncertainty. It should be noted that many AAII members had expressed concerns about the size of the federal deficit before the recent debt ceiling debate occurred.

Here is a sampling of the responses. some of which were given before the debt ceiling debate was resolved:

• "I expect a negative impact because the debt ceiling increase is now and the meager cuts are a future promise at best."
• "I think the uncertainty of the outcome of the debate (over not only the debt ceiling. but future tax policy. healthcare and federal regulations) has caused businesses-big and small-to move cautiously."
• "It was another hurdle for an already frail market to overcome. In the short and perhaps long term. it did considerable damage to our economy."
• "A negative impact. Congress is just delaying problems rather than dealing with them."
• "Very little impact. It's market noise and doing nothing more than adding to the short-term volatility."

This week's Sentiment Survey results:

• Bullish: 27.2%. down 10.7 percentage points
• Neutral: 23.0%. down 7.8 percentage points
• Bearish: 49.9%. up 18.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 28. 2011

Bullish sentiment fell 2.0 percentage points to 37.8% in the latest AAII Sentiment Survey. This is the first time in four weeks that the percentage of individual investors who expect stock prices to rise over the next six months fell below the historical average of 39%.

Neutral sentiment. expectations that stock prices will rise over the next six months. rose 1.2 percentage points to 30.7%. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. edged up 0.8 percentage points to 31.4%. This is a five-week high for bearish sentiment. The historical average is 30%.

Bearish sentiment has yet to rise significantly in reaction to the ongoing debt ceiling standoff in Washington. D.C. AAII members told us in early July that they were more focused on corporate earnings than the debt ceiling. This said. many individual investors have previously expressed concern about the federal deficit and potentially higher interest rates in the future.

Though bullish sentiment is at a five-week low and bearish sentiment is at a five-week high. both indicators remain close to their historical averages. Optimism about better-than-expected second-quarter earnings is tempered by concerns about the slow pace of economic growth. the lack of a resolution to the U.S. debt ceiling debate and European sovereign debt.

Individual investors have remained cautious about the direction of stock prices throughout most of the year. This is evident in bearish sentiment. which has been at or above its historical average for 20 out of the last 23 weeks.

This week's special question asked AAII members if they thought the European Union (EU) would be able to find a resolution to its sovereign debt problems (e.g.. Greece). Responses were evenly split between those who thought a resolution would be found and those who thought a resolution would not be found. A few were not sure or didn't believe they had enough information to form a judgment.

Here is a sampling of the responses:

• "I am confident that the EU will find a 'resolution' to the sovereign debt problems. I wish I had an idea of what that 'resolution' will look like and when they will find it."
• "I am confident that the EU will eventually find a resolution. but it will probably be a long. bumpy road to get there."
• "I don't know how it can be achieved with many budgets and taxing authorities and one currency! I am not confident."
• "Germany is going to pull the plug. I have no confidence at all that the European Union will have the ability to stem the flow of funds going out."
• "The short term will be difficult. I am more sanguine about the long term."

This week's AAII Sentiment Survey Results:

• Bullish: 37.8%. down 2.0 percentage points
• Neutral: 30.7%. up 1.2 percentage points
• Bearish: 31.4%. up 0.8 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 21. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. edged up 0.5 percentage points in the latest AAII Sentiment Survey. This week's reading of 39.9% keeps optimism close to its historical average of 39% for the second consecutive week.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. fell 1.9 percentage points to 29.5%. This is a four-week low for neutral sentiment. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. rose 1.4 percentage points to 30.6%. This is a four-week high. The historical average is 30%.

Both bullish and bearish sentiment are close to their historical averages. Optimism about better-than-expected second-quarter earnings is tempered by concerns about the slow pace of economic growth. the lack of a resolution to the U.S. debt ceiling debate and European sovereign debt.

This week's special question asked what the chances were of a third round of stimulus from the Federal Reserve. Responses varied. though the largest number of respondents said the odds were low (less than a 35% chance). A smaller. but significant group said the odds were high (greater than 65%). Several said it was essentially a coin toss (between a 40% and a 60% chance).

Here is a sampling of the responses:

• "Depends on the economy. If the economy continues to stall. the Fed will act."
• "High. With the economy continuing to languish. the Fed will likely provide a new round of stimulus."
• "Hopefully low. Monetary stimuli have had very little effect on the economy so far."
• "I think the chances are low. The economy is improving. albeit slowly. As long as there is improvement. the Fed can't justify QE3."
• "I think the chances are very high. As much as I favor free markets and decreased taxes. this is an upcoming election year."
• "Stimulus efforts have not worked so far in creating employment. I doubt they will repeat the same policy."

• Bullish: 39.9%. up 0.5 percentage points
• Neutral: 29.5%. down 1.9 percentage points
• Bearish: 30.6%. up 1.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 14. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 2.5 percentage points in the latest AAII Sentiment Survey. Optimism declined to 39.3%. putting it essentially even with its historical average of 39%.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next months. fell 2.1 percentage points to 31.4%. The historical average is 31%.

Bearish sentiment. expectations that stock prices will rise over the next six months. jumped 4.6 percentage points to 29.2%. This was the first time pessimism has increased in five weeks. The historical average is 30%.

This week's results showed a reversion to the mean. with all three readings near their historical averages. The weak June jobs report likely added to individual investors' concerns about the pace of economic growth. The lack of progress on resolving the debt ceiling is not helping either. On the other hand. expectations for good second-quarter earnings and the ability of stocks to hold onto much of their recent gains are contributing to individual investors' cautiously optimistic stance.

This week's special question asked AAII members if they are looking at growth. value or dividend-paying stocks right now. Respondents overwhelming said they are looking at dividend-paying stocks. Some clarified by saying they were looking for a combination of dividends and value or dividends and growth. A few expressed a preference for primarily value or growth stocks.

Here is a sampling of the responses:

• "Dividend-paying. I am retired and this adds to the income. In addition. in these uncertain times. the dividend provides a measure of assurance of return."
• "Looking for value and dividend yield. I don't think this is the time for a broad market surge. and I don't trust the growth stocks right now."
• "If the market is going nowhere for the next six months. then dividend-paying stocks appear to be a rational choice."
• "Value and dividend-paying. since both historically perform better in periods of rising interest rates.
• "Good value and growth stocks are very good investments for a bullish market outlook."

This week's AAII Sentiment Survey results:

• Bullish: 39.3%. down 2.5 percentage points
• Neutral: 31.4%. down 2.1 percentage points
• Bearish: 29.2%. up 4.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 7. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. increased 3.5 percentage points to 41.8% in the latest AAII Sentiment Survey. This is first the time that optimism has been above its historical average of 39% since April 14. 2011.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 2.1 percentage points to 33.5%. This is a five-week high for neutral sentiment. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. dropped 5.5 percentage points to 24.7%. This is the lowest level of pessimism since January 13. 2011. It is also the just the second time in 20 weeks that bearish sentiment has been below its historical average of 30%.

Bearish sentiment has plunged by a cumulative 23.0 percentage points since setting a 2011 high of 47.7% on June 9. Bullish sentiment has improved 17.4 percentage points over the same period. A combination of factors has led to this shift. including rebounding stock prices and falling gasoline prices. Optimism is close to its historical average. however. and many investors still have concerns about the pace of economic growth and the ongoing debate over the debt ceiling.

This week's special question asked AAII members if they will be more focused on the ongoing debate over the U.S. debt ceiling or on quarterly profits and earnings guidance. The overwhelming majority of respondents said they will be more focused on earnings. A sizeable minority said they would be more focused on the debt ceiling. however. A few respondents said they were either paying equal attention to both or were more focused on other market factors. such as the trend in stock prices.

Here is a sampling of the responses:

• "I'm focused on the debt ceiling debate. because a U.S. default will cause major problems for the stock market."
• "Earnings reports will influence my decisions. The debt ceiling debate will (I predict) soon be settled one way or the other."
• "Earnings until the decision is made to default; then all bets are off!"
• "If the elected officials can't reach agreement on the U.S. debt. I fear many bad things will happen to the U.S. economy."
• "The absolute value of earnings will be determined by the U.S. dollar. I'm a concerned as to what happens with the United States' credit rating and interest rates."

This week's AAII Sentiment Survey Results:

• Bullish: 41.8%. up 3.5 percentage points
• Neutral: 33.5%. up 2.1 percentage points
• Bearish: 24.7%. down 5.5 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 26. 2011

Bullish sentiment fell 1.1 percentage points to 25.6% in the latest AAII Sentiment Survey. Expectations that stock prices will rise over the next six months remained at the lowest level registered since August 26. 2010. The historical average is 39%.

Neutral sentiment. expectations that stock prices will essentially be unchanged over the next six months. rose 0.9 percentage points to 33.0%. This is the sixth consecutive week that neutral sentiment has been above its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. edged up 0.1 percentage points to 41.4%. Pessimism was last higher on September 2. 2010. Bearish sentiment has now been above its historical average of 30% for 13 out of the last 14 weeks.

The continuing volatility in the markets is dampening individual investors' enthusiasm for stocks. (The uneven pace of the economic recovery. still high gas prices and European sovereign debt issues are not helping either.) This can be seen in the bullish sentiment readings. which have fallen for four consecutive weeks and have been below average for six consecutive weeks. Even with the decline. bullish sentiment is just slightly beyond one standard deviation of its historical norm. making the current reading atypical. but still not an outlier.

This week's special question asked AAII members which sectors and industries they like right now. Energy was named by the largest number of respondents. followed by health care and technology. When the same question was asked in February. AAII members said they liked energy. technology and commodities/basic materials.

This week's sentiment survey results:

• Bullish: 25.6%. down 1.1 percentage points
• Neutral: 33.0%. up 0.9 percentage points
• Bearish: 41.4%. up 0.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 19. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 4.1 percentage points to 26.7% in the latest AAII Sentiment Survey. This is the lowest level of optimism since August 26. 2010. The historical average is 39%.

Neutral sentiment. expectations that stock prices will remain essentially unchanged over the next six months. slipped 1.7 percentage points to 32.0%. Nonetheless. neutral sentiment is above its historical average of 31% for the fifth consecutive week.

Bearish sentiment. expectations that stock prices will fall over the next six months. jumped 5.8 percentage points to 41.3%. This is the highest level of pessimism since September 2. 2010. It is also the 12th time in 13 weeks that bearish sentiment has been above its historical average of 30%.

The volatility in stock prices. recent drop in commodity prices and continued high cost of gasoline have taken their toll on investor confidence. Though bearish sentiment is more than 11 percentage points above average. it is not at levels that would suggest investors are overly pessimistic. Rather it is just one standard deviation away from its average. making the current reading atypical. but not an outlier.

This week's special question asked AAII members whether the U.S. economy is doing better or worse than government statistics indicate. The only thing close to a consensus among the responses was an opinion that the data is not accurately reflecting the health of the economy. (A small number of respondents. however. took the opposite stance and thought the data was accurately portraying the economy.)

Among those who thought the data was incorrectly describing the economy. the largest proportion described conditions as being worse than indicated. Many. however. said the economy is performing better than the official statistics show.

Here is a sampling of the responses:

This week's sentiment survey results:

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> May 12. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 4.7 percentage points to 30.8% in the latest AAII Sentiment Survey. This is the lowest level of optimism in eight weeks. The historical average is 39%.

Neutral sentiment. expectations that stock prices will remain essentially unchanged over the next six months. rose 1.1 percentage points to 33.7%. This is the fourth consecutive week that neutral sentiment has been above its historical average of 31%.

Bearish sentiment is at an eight-week high. Expectations that stock prices will fall over the next six months rose 3.6 percentage points to 35.5%. Bearish sentiment has been above its historical average of 30% for 11 out of the past 12 weeks.

The underlying worry about the direction of the stock market intensified this week. as can be seen by the increase in bearish sentiment. At the same time. the level of cautious optimism continued to erode as bullish sentiment declined for the fourth time in five weeks. Positive sentiment from better-than-expected earnings has been countered by rising prices. the uneven pace of the economic recovery. the federal deficit and recent volatility in stock prices.

This week's special question asked AAII members how the current price of gasoline. which is averaging approximately $4 per gallon nationally. is affecting their six-month outlook for stocks. The majority of respondents said it was having a negative impact. A sizeable minority said it was not impacting their outlook. Several others predicted that gasoline prices will fall. Oil prices declined during the survey period and this may have had some impact on the results.

Here is a sampling of the responses:

• "It's like an extra tax on consumers. which negatively impacts the economy."
• "Consumers will have to cut back on expenditures. Stock prices will drop slightly."
• "The longer the price stays at this level. the slower the economy will grow."
• "Gas prices are starting to go down. but not enough. Gas shouldn't have much overall effect on stocks."
• "It has already been discounted by the financial markets."
• "I'll avoid driving."

• Bullish: 30.8%; down 4.7 percentage points
• Neutral: 33.7%; up 1.1 percentage points
• Bearish: 35.5%; up 3.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> May 5. 2011

Bullish sentiment fell 2.4 percentage points to 35.5% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months remained below its historical average of 39% for the third consecutive week.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 1.2 percentage points to 32.7%. This is the third consecutive week that neutral sentiment is above its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. increased 1.2 percentage points to 31.9%. The level of pessimism remains within a very tight right range for the fifth time in six weeks. The historical average is 30%.

Bearish sentiment has now come in above its historical average for 10 out of the last 11 weeks. Yet. over the same time period. more investors describe themselves as upbeat than downbeat. Combined. these indicators tell us that though individual investors. in aggregate. remain optimistic about the direction of stock prices. they are only cautiously optimistic. Positive sentiment from rising stock prices and better-than-expected earnings is being countered by rising gasoline and food prices. the uneven pace of the economic recovery and the federal deficit.

This week's special question asked AAII members when the Federal Reserve will start to raise interest rates. Responses varied from as early as this June to after the 2012 presidential elections. The first quarter of 2012 was selected by the largest number of respondents. followed by the fourth quarter of 2011. An even number of respondents thought the first rate hike will either occur in the third quarter of 2011 or after the first quarter of 2012.

Here is a sampling of the responses:

• "If this summer produces consistent growth in prices. the Fed will raise rates after Labor Day."
• "Rates have been held artificially low and with inflation appearing in several sectors. the Fed will probably start to move rates up in the fourth quarter of this year."
• "First quarter of 2012. based on Fed Chairman Ben Bernanke's press conference."
• "After the first quarter of 2012. The Fed will wait as long as they can in hopes of fueling the economy."
• "Fourth quarter of 2012. The Fed will not want to impact the elections. so they will hold out longer than they should."

This week's sentiment survey results:

• Bullish: 35.5%; down 2.4 percentage points
• Neutral: 32.7%; up 1.2 percentage points
• Bearish: 31.9%; up 1.2 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> April 28. 2011

Bullish sentiment rebounded 5.7 percentage points to 37.9% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months remained below its historical average of 39% for the second consecutive week.

Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. fell 5.4 percentage points to 31.5%. The decline brought neutral sentiment back close to its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. declined 0.3 percentage points to 30.6%. Even with the small drop. bearish sentiment has been essentially unchanged during four out of the last five weeks. The historical average is 30%.

Individual investors continue to be cautiously optimistic. Better-than-forecast earnings and rising stock prices are keeping many optimistic. while inflationary pressures and the uneven pace of the economic recovery remain a concern.

This week's special question asked AAII members whether they thought the stock market is fairly valued. undervalued or overvalued. The majority of the respondents were split between describing stocks as being fairly valued and overvalued. A notable minority thought stocks were undervalued.

Here is a sampling of the responses:

• "The market is fairly valued and is morphing into becoming overvalued."
• "I believe the market is fairly valued. but. at this rate. not for long. Stocks could become overvalued in a couple of months."
• "Probably fairly valued. However. world events have created so much volatility that the market remains very risky."
• "I believe the market is overvalued because earnings are based on record profit margins. which will return to normal or get worse if inflation picks up."
• "If inflation rises. then the market is overvalued and will decline."
• "Undervalued. Stocks are climbing the wall of worry." This week's sentiment survey results:
  • Bullish: 37.9%. up 5.7 percentage points
  • Neutral: 31.5%. down 5.4 percentage points
  • Bearish: 30.6%. down 0.3 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 21. 2011

  Bullish sentiment plunged 10.1 percentage points to 32.2% in the latest AAII Sentiment Survey. The percentage of investors who expect stock prices to rise over the next six months is at a five-week low. This is also the first time in four weeks that bullish sentiment is below its historical average of 39%.
  
  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. soared 10.1 percentage points to 36.8%. This is the highest neutral sentiment has been since March 4. 2010. It is also the first time in five weeks that neutral sentiment has been above its historical average of 31%.
  
  Bearish sentiment. expectations that stock prices will fall over the next six months. was unchanged at 31.0%. The historical average is 30%.
  
  The sharp increase in neutral sentiment follows modest decline in stock prices and a continued climb in gasoline prices. Though bullish sentiment has been above its historical average for the last three weeks. optimism among individual investors has been cautious. Corporate earnings. a rebounding economy and the stock market’s rally have given individual investors hope. while the sluggish labor market. rising gasoline prices. federal deficit and global events are ongoing sources of concern.
  
  This week's special question asked AAII members how much impact the political wrangling about the federal deficit ceiling was having on their sentiment toward stocks. Responses varied from no impact to a significant impact. Some AAII members did not view the deficit issue as having an immediate impact. but thought it could adversely affect stock prices in the future if it is not dealt with.
  
  I should point out that the survey period ran from Thursday. April 14. through Wednesday. April 20. The majority of the responses were provided prior to Standard & Poor's issuing of a negative credit watch warning for U.S. sovereign debt on Monday morning. There was no difference in the variance of responses before or after the warning was announced.
  
  Here is a sampling of the responses:

  • “As the reaction to the downgrade of U.S. debt by S&P showed this week. the political wrangling can have some temporary impact on stock sentiment.”
  • “I think it is significant. but I also believe there are enough grown-ups on both sides of the political aisle to not let the country default.”
  • “It adds a significant amount of uncertainty. which has a significant impact on the outlook for growth.”
  • “No impact on sentiment. The geopolitical events. resource demand versus supply. and worldwide financial risk are having the major effects on sentiment.”
  • “Not much impact yet. but give it a few weeks.”
  • “It is not having any effect on my sentiment. because this is what politicians do. No action and lots of talking.”

  This week's sentiment survey results:

  • Bullish: 32.2%. down 10.1 percentage points
  • Neutral: 36.8%. up 10.1 percentage points
  • Bearish: 31.0%. up 0.0 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 14. 2011

  Bullish sentiment slipped 1.4 percentage points to 42.2% in the latest AAII sentiment survey. Optimism that stock prices will rise over the next months stayed within a two percentage point range for the third consecutive week. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. edged down 0.8% to 26.8%. This is a nine-week low for neutral sentiment. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 2.1 percentage points to 31.0%. The historical average is 30%.

  Individual investors remain optimistic about the short-term direction for stock prices. although cautiously so. Bearish sentiment received a boost from last week's federal budget battle and a small decline in stock prices. but both optimism and pessimism remain near their historical averages. Corporate earnings. a rebounding economy and the stock market's rally are giving individual investors hope. while the sluggish labor market and global events are keeping them from being overly sanguine.

  This week's special question asked AAII members about their longer-term view. Specifically. they were asked whether there was more potential upside or downside for stocks over the next 12 to 24 months. Respondents were divided. with slightly more anticipating a further rise in stocks prices than those who thought stock prices will fall. A small number thought stocks would fluctuate and not show big gains or losses.

  Here is a sampling of the responses.

  • "Our recovery is still in the early stages. The potential for stocks is positive."
  • "There is more potential for gains over the next 12-24 months as the economy gains steam."
  • "We are in a secular bear market. and I foresee a huge downside for stocks."
  • "I think there is more potential downside for stocks. I base this on the Middle East conflicts and the current presidential administration's economic policies."
  • "I anticipate a volatile market where selectivity will be important."

  This week's sentiment survey results:

  • Bullish: 42.2%. down 1.4 percentage points
  • Neutral: 26.8%. down 0.8 percentage points
  • Bearish: 31.0%. up 2.1 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 7. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. improved 1.8 percentage points to 43.6% in the latest AAII Sentiment Survey. This was the third consecutive weekly increase and it puts optimism at a seven-week high. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will be essentially unchanged over the next six months. remained essentially unchanged for the second consecutive week at 27.6%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 2.2 percentage points to 28.8%. This was the third consecutive decline in pessimism. which is now at a seven-week low. The historical average is 30%.

  The stock market's ability to shrug off bad news--including Japan. European debt. rising commodity prices and the threat of a government shutdown--is helping individual investors regain their confidence in the short-term direction for stock prices. It should be noted. however. that both bullish and bearish sentiment are still close to their historical averages. Therefore. I would describe individual investors as being optimistic. but cautiously so.

  This week's special question asked AAII members about their expectations for first-quarter earnings. The consensus was that first-quarter profits will be good. Some respondents. however. expressed concern about the impact higher inflation could have on earnings for the remainder of the year.

  Here is a sampling of the responses:

  • First-quarter earnings should be very strong."
  • I believe that pending the end of the Fed's quantitative easing program. we will generally see strong earnings."
  • First-quarter earnings will generally be okay. Second- and third-quarter earnings will be more interesting."
  • I will be watching for accompanying guidance about second-quarter earnings. especially warnings about rapidly escalating input costs."

  This week's AAII Sentiment Survey Results:

  • Bullish: 43.6%. up 1.8 percentage points
  • Neutral: 27.6%. up 0.4 percentage points
  • Bearish: 28.8%. down 2.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 31. 2011

  Bullish sentiment improved 4.1 percentage points to 41.8% in the latest AAII Sentiment Survey. This is the first time optimism that stock prices will rise over the next six months has been above its historical average of 39% since February 17. 2011.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. was down a very modest 0.2 percentage points at 27.1%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. declined 3.9 percentage points to 31.1%. This is a six-week low for pessimism. The historical average is 30%.

  The S&P 500's rebound over the past seven days has renewed investors' optimism about the direction of stock prices. It is a cautious optimism. however. with bearish sentiment staying above its historical average for sixth consecutive week.

  This week's special question asked AAII members at what point rising oil prices would have them worried about a potential slowing of economic growth. The majority of respondents fell into one of three groups. The first thought oil was already having a negative impact. The second said if crude stayed at $120 per barrel or higher. economic growth would be curtailed. The third said oil would have to rise above the $140 - $150 per barrel range to make them worried.

  Here is a sampling of the responses:

  • "I am somewhat concerned at these levels; oil at $125 per barrel or more would turn my concern into real worry."
  • "A price per barrel above $120 for a significant period of time would worry me and force me to re-examine my entire portfolio."
  • "I think the more common barometer is the price of a gallon of gas. I believe the breaking point is $4."
  • "At current levels. I am not concerned. If oil got to $140 per barrel. then I think it would be a headwind. Also. if the price of gas rose above $4 a gallon."
  • "The current price of oil will slow growth as it impacts discretionary spending by consumers. Automobiles do not run on iPads."

  This week's AAII Sentiment Survey results:

  • Bullish: 41.8%. up 4.1 percentage points
  • Neutral: 27.1%. down 0.2 percentage points
  • Bearish: 31.1%. down 3.9 percentage point

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 24. 2011

  Bullish sentiment rebounded 9.2 percentage points to 37.7% in the latest AAII Sentiment Survey. This is a five-week high for optimism about the six-month direction of stock prices. Nevertheless. bullish sentiment continues to stay below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will stay essentially unchanged over the next six months. fell 4.1 percentage points to 27.3%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. declined 5.2 percentage points to 35.0%. Even with the pullback. bearish sentiment remained above its historical average of 30% for the fifth consecutive week.

  The percentages of individual investors describing themselves as bullish or bearish remained close for the fourth time in five weeks. The lack of a clear signal is a reflection of the market's recent volatility. Though this week's rebound in stock prices helped restore some optimism. the latest survey results show that many AAII members continue to have cautious attitudes.

  This week's special question asked AAII members whether domestic or global/foreign issues were having a bigger impact on their sentiment. The responses were evenly split. with some members saying both domestic and international events were having an equal impact. Here is a sampling of the responses:

  • "Domestic issues--I think our economy is coming back. and the various threats are not likely going to be strong enough to reverse this."
  • "It is the labor markets. housing and the lack of political will to reduce the budget and adopt policies to improve the economy."
  • "The financial markets in the European Union are a continuing threat to growth in the overall global economy."
  • "With the problems in the Middle East. the disaster in Japan. and our unstable economy. I see nothing but an unstable market."
  • "I am amazed at the resilience of the market given all of the bad news; it just keeps bobbing up like a cork."

  This week's AAII Sentiment Survey results:

  • Bullish: 37.7%. up 9.2 percentage points
  • Neutral: 27.3% down 4.1 percentage points
  • Bearish: 35.0%. down 5.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 17. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. fell 7.5 percentage points to 28.5% in the latest AAII Sentiment Survey. This is the lowest optimism has been since August 26. 2010. It is also the fourth consecutive week that bullish sentiment has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. edged down 0.3 percentage points to 31.4%. This is the second consecutive week that neutral sentiment has been slightly above its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. jumped 7.8 percentage points to 40.1%. This is the highest pessimism has been since September 2. 2010. Bearish sentiment has now been above its historical average of 30% for four consecutive weeks.

  The continued volatility in the markets is clearly taking a toll on individual investors' attitudes. as can be seen by today's numbers. Neither bullish nor bearish sentiment are at levels that would be considered contrarian. however. based on the survey's historical results. Nonetheless. if the S&P 500 is in the midst of a correction. it is likely we could continue to see elevated levels bearish sentiment until a short-term floor for stock prices is found.

  This week's special question asked AAII members if the Federal Reserve should be more aggressive in fighting inflation or if the central bank should stay focused on the economy. Approximately half of respondents said the Fed should shift its focus towards fighting inflation. A sizeable minority thought the Fed was correct to keep its focus on stimulating the economy. however.

  Here is a sampling of the responses.

  • "I would like to see the Fed back off (on providing economic stimulus). I believe they are setting us up for inflation in the long run."
  • "The Fed is already too late in fighting inflation. Gas and food inflation is just beginning."
  • "I am not sure that aggressively fighting inflation is warranted at this point. but the Fed should stop stimulating the economy."
  • "The Fed should continue to stimulate the economy because of problems in Europe. unrest in the Middle East and a possible slowdown in China's economy."
  • "Stimulating the economy is more important. Unemployment is still the number one problem for a consumer-based economy."

  This week's AAII Sentiment Survey results:

  • Bullish: 28.5%. down 7.5 percentage points
  • Neutral: 31.4%. down 0.3 percentage points
  • Bearish: 40.1%. up 7.8 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 10. 2011

  Bullish sentiment slipped 0.8 percentage points to 36.0% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months is at its lowest level since September 2. 2010. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. rose 1.7 percentage points to 31.7%. This is the first time neutral sentiment has been above its historical average of 31% since August 5. 2010.

  Bearish sentiment. expectations that stock prices will fall over the six next months. declined 0.8 percentage points to 32.3%. This is the third consecutive week that pessimism has been above its historical average of 30%.

  In a word. individual investors remain split over the short-term direction of stock prices. Though slightly more AAII members are optimistic than pessimistic. bullish sentiment remains below its historical average. This is occurring as the S&P 500 has stayed within an approximate 3% trading range since late February. The numbers reflect both recognition of stronger corporate earnings and unease about the threat of higher inflation and interest rates.

  This week's special question asked AAII members what type of stocks they are looking at: value. growth or dividend-paying. Respondents overwhelmingly expressed their preference for dividend-paying stocks.

  Here is a sampling of the responses:

  • "Dividend-paying. They provide a return even if the market does not go up. They also seem to be a much better value than most bonds and CDs at this time."
  • "With interest rates certain to rise over time and bond prices coming down. dividend-paying stocks promise better income return as well as the potential to increase in value."
  • "While I am looking for growth at a reasonable price (GARP). as a retiree. I insist upon receiving (preferably growing) dividends."
  • "Value and dividend paying stocks. The market is fairly valued."

  This week's sentiment survey results:

  • Bullish: 36.0%; down 0.8 percentage points
  • Neutral: 31.7%; up 1.7 percentage points
  • Bearish: 32.3%; down 0.8 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 3. 2011

  Bullish sentiment is essentially unchanged in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months edged up 0.2 percentage points to 36.8%. This is the second consecutive week that bullish sentiment has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will be essentially unchanged over the next six months. rose 2.7 percentage points to 30.0%. This is the highest reading for neutral sentiment since August 12. 2010. Despite the increase. neutral sentiment remained below its historical average of 31% for the 30th consecutive week.

  Bearish sentiment. expectations that stock prices will fall. slipped 3.0 percentage points to 33.2%. Despite the decline. pessimism stayed above its historical average of 30% for the second consecutive week.

  Individual investors remained cautious about the short-term outlook for stocks. This is not surprising given the recent return of volatility to the stock market and higher oil prices. In addition. it is worth noting that there is underlying unease about the pace of the economic recovery. inflation and the federal deficit.

  This week's special question asked AAII members if they have made any changes to their portfolios because of the turmoil in the Middle East. The overwhelming majority of respondents said no. they had not. Some did say they bought energy stocks. while others indicated the market's recent volatility was a bigger factor in their decisions.

  Here is a sampling of the responses:

  • "No. I have not made any changes. I only see only the oil/gas sector being affected by this in the short term by this."
  • "No. but I expect to see an increase in volatility in the short run."
  • "No changes. but I've become more apprehensive about the short-term outlook for stocks."
  • "I've increased my exposure to oil. Oil always wins."
  • "No changes. I'm nearing retirement. but am still a long-term investor."

  This week's sentiment survey results:

  • Bullish: 36.8%. up 0.2 percentage points
  • Neutral: 30.0%. up 2.7 percentage points
  • Bearish: 33.2%. down 3.0 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 24. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. plunged 9.9 percentage points to 36.6% in the latest AAII Sentiment Survey. This is the first time in 25 weeks that optimism has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. edged down 0.6 percentage points to 27.2%. This is the 29th consecutive week that neutral sentiment has remained below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. surged 10.7 percentage points to 36.2%. Pessimism is at its highest level since September 2. 2010. This is just the fourth time in the past 24 weeks that bearish sentiment has been above its historical average of 30%.

  The ongoing instability in the Middle East is intensifying concern about higher rates of inflation. Individual investors are already seeing higher gas prices at the pump. and there is worry that even higher prices could slow down the pace of the economic recovery. Though AAII members had been optimistic about the direction of stock prices. there was underlying unease about jobs. the federal deficit and the potential for rising interest rates and inflation. Thus. though individual investors were hopeful. they were not exuberant.

  This week's special question asked AAII members what economic or market-related catalysts they are looking for over the next few months. Responses varied. though the possibility of higher inflation was cited by the largest number of respondents. Many individual investors said they were monitoring events in the Middle East. expecting higher interest rates and watching to see if Washington will make any meaningful progress on the deficit and avoiding a shutdown.

  Here is a sample of the responses.

  • "Inflation. I believe there is growing pressure for producers to start passing on some of the rise in commodity costs soon. or their profitability will begin to suffer."
  • "North Africa is like a smoldering tinderbox. and that is sure to have ramifications on the U.S. markets."
  • "I am watching Washington. Will it engage in problem solving or political behavior with respect to its fiscal agenda?"
  • "I am looking at the all the capital that corporate America is sitting on. If I see them start to utilize the capital. I will be long on large-cap stocks."
  • "Employed people spending money drive our economy. Steadily increasing employment is key to our continued recovery."

  This week's sentiment survey results:

  • Bullish: 36.6%. down 9.9 percentage points
  • Neutral: 27.2%. down 0.6 percentage points
  • Bearish: 36.2%. up 10.7 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 17. 2011

  Bullish sentiment declined 2.8 percentage points to 46.6% in the latest AAII Sentiment Survey. This is the third time in four weeks that optimism has been below 50%. Nonetheless. bullish sentiment. expectations that stock prices will rise over the next six months. was above its historical average of 39% for the 24th consecutive week. This is the second longest such streak in the survey's history.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 4.2 percentage points to 27.9%. This is a seven-week high for neutral sentiment. Nonetheless. neutral sentiment remained below its historical average of 31% for the 28th consecutive week.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 1.3 percentage points to 25.6%. This was the 20th time in the past 23 weeks that pessimism has been below its historical average of 30%.

  As stated above. bullish sentiment has come in below 50% during three out of the last four weeks. Though still high. optimism has cooled a bit from the red hot levels recorded throughout much of December and January. The continuation of the rally's current leg. better-than-expected earnings and calm market conditions are combining to keep individual investors hopeful about the direction of stock prices.

  This week's special question asked AAII members about the current lack of volatility. (There have only been four days since December 3 when the S&P 500 has posted a daily gain or loss of greater than 1%.) Opinions varied. but many members thought the markets are currently experiencing a false sense of calm. A sizeable minority. however. thought the low level of volatility was justified.

  Though the belief that there is a false sense of calm may sound like it contradicts what our weekly sentiment survey has been registering. I think it accurately portrays what many investors are feeling. Earnings and the economy are recovering. but there are still several underlying problems (unemployment. housing. the federal deficit. etc.). Thus. while there is optimism. there is also discomfort.

  Here is a sampling of what AAII members said about the current lack of volatility:

  • "Although it is very encouraging. I continue to have a low level of anxiety."
  • "It's not a false sense of calm. but more an illusion of calm. There is still some serious deleveraging going on in the economy."
  • "It's a false sense of security. Everybody is once again believing in the miracle."
  • "It's justified...Too many positive developments nationally and internationally with mid-term implications to ignore."
  • "I believe the lack of volatility signifies that many people may believe the good times have arrived again."

  This week's sentiment survey results:

  • Bullish: 46.6%; down 2.8 percentage points
  • Neutral: 27.9%; up 4.2 percentage points
  • Bearish: 25.6%; down 1.3 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 10. 2011

  Bullish sentiment declined 2.1 percentage points to 49.4% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months was above its historical average of 39% for the 23rd consecutive week. This is the second longest such streak since 2004. (Bullish sentiment stayed above its historical average for the 42 consecutive weeks between May 29. 2003. and March 11. 2004.)

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 2.1 percentage points to 23.7%. This was the 27th consecutive week that neutral sentiment has been below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. was unchanged at 26.9%. This was the 19th time in the past 22 weeks that pessimism has been below its historical average of 30%.

  Bullish sentiment came in below 50% for only the second time in the past 10 weeks. Despite this week's dip. bullish sentiment remains at high levels. It is worth noting that during the past 10-weeks. volatility has largely been absent from the markets. with the S&P 500 posting a gain or loss bigger than 1% on just a handful of days. The calm markets. combined with rising stock prices and better-than-expected earnings. are keeping investors optimistic.

  This week's special question asked AAII members which sectors and industries they like right now. Energy was named by the largest number of respondents. followed by technology and commodities/basic materials. In a distant third were financials and health care. When the same question was asked last October. AAII members said they liked technology. followed by commodities. gold. energy. financials. and health care.

  This week's sentiment survey results:

  • Bullish: 49.4%. down 2.1 percentage points
  • Neutral: 23.7%. up 2.1 percentage points
  • Bearish: 26.9%. no change

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 3. 2011

  Bullish sentiment rebounded by 9.5 percentage points in the latest AAII Sentiment Survey. The proportion of individual investors who expect stock prices to rise over the next six months rose to 51.5%. Bullish sentiment has now been above its historical average of 39% for 22 consecutive weeks. the second longest such streak in the survey's history.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. fell 2.1 percentage points to 21.6%. This is the 26th consecutive week that neutral sentiment has been below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 7.4 percentage points to 26.9%. This is the 18th time in the past 21 weeks that pessimism has been below its historical average of 30%.

  The relative decline in optimism that we have seen during the past few weeks was reversed. Better-than-expected earnings and a lack of additional downward volatility are keeping investors very optimistic.

  It is worth noting that bullish sentiment stayed mostly at high levels during its three-week decline in January. Furthermore. optimism has now topped 50% eight times during the past nine weeks. Though extraordinarily rare. we have seen this occur before. Bullish sentiment stayed at or exceeded 50% during a 28-week stretch between August 14. 2003 and February 19. 2004.

  This week's special question asked AAII members for their Super Bowl predictions. The majority of respondents said the Green Bay Packers will defeat the Pittsburgh Steelers.

  This week's sentiment survey results:

  • Bullish: 51.5%. up 9.5 percentage points
  • Neutral: 21.6%. down 2.1 percentage points
  • Bearish: 26.9%. down 7.4 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> Bullish sentiment fell to a 10-week low in the latest AAII Sentiment Survey. Expectations that stock prices will rise over the next six months fell 8.7 percentage points to 42.0%. Despite the decrease. bullish sentiment remains above its historical average for the 21st consecutive week. This is the second longest streak for above-average bullish sentiment since the survey began in 1987.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 3.5 percentage points to 23.7%. Nonetheless. neutral sentiment remains below its historical average of 31% for the 25th consecutive week.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 5.2 percentage points to 34.3%. This is the highest level of pessimism since September 2. 2010. It is also only the fourth week since then that bearish sentiment has been above its historical average of 30%.

  Bearish sentiment has nearly doubled over the past four weeks. from 18.3% on January 6 to 34.3% now. Though this does somewhat reflect a reversion to the mean. it also shows that some investors are becoming less enthusiastic about the short-term direction of the stock market. The length of the rally. the 1% decline in the S&P 500 last Wednesday (January 19). and the level of optimism signaled by the various sentiment surveys-including ours-are all contributing factors.

  It is important to note. however. that bullish sentiment continues to stay above its historical average. The current 21-week streak of above-average bullish sentiment is the second longest such streak in the survey's history.

  This week's special question asked AAII Members if they were taking on more risk as of late or if they were investing more conservatively (meaning taking on less risk). About half of the respondents said they are taking on less risk. A third said they are taking on more risk. The rest said they were not making any real changes.

  Here is a sampling of the results:

  • "I'm investing a little more conservatively. since we've had a big run up in the last six months."
  • "Conservatively. Sentiment indicators are extremely bullish. and you know that's a contrarian indicator."
  • "I am investing more of my cash reserves. but with stocks and funds I consider to be of moderate risk."
  • "I have been taking on more risks with my individual stock picks. The run up since March 2009 has perhaps emboldened me."
  • "More risk. The economy still improving. although slowly. President Obama will likely focus more on the economy."

  This week's sentiment survey results:

  • Bullish: 42.0%; down 8.7 percentage points
  • Neutral: 23.7%; up 3.5 percentage points
  • Bearish: 34.3%; up 5.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> January 20. 2011

  Bullish sentiment declined 1.6 percentage points to 50.7% in the latest AAII Sentiment Survey. This is a five-week low for expectations that stock prices will rise over the next six months. Nonetheless. optimism remains more than one standard deviation above its historic average of 39%-a sign that it remains at high levels.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. fell 4.0 percentage points to 20.1%. This is a 10-week low. Neutral sentiment has been below its historical average of 31% for 24 consecutive weeks.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 5.7 percentage points to 29.1%. This is the highest level of pessimism since November 18. 2010. Despite the increase. bearish sentiment stayed below its historical average for the 17th time in the past 19 weeks.

  Bullish sentiment stayed above its historical average for the 20th consecutive week. the second longest streak in the survey's history. A record streak of 42 consecutive weeks occurred between May 29. 2003 and March 11. 2004. The S&P 500 did fall during the months after the above-average bullish sentiment streak ended. but the pullback was a modest. mid-single-digit percentage point drop.

  As far as bearish sentiment rising. it may simply represent a reversion to the mean. Concerns about the economy and the federal deficit have not subsided. even if positive news headlines have most investors feeling more upbeat about the outlook for stocks. Plus. the streak of high bullish readings may have some individual investors concerned that optimism may be too high.

  This week's special question asked AAII members if their views on the economy have changed from what they were six months ago. particularly given recent data. The overwhelming majority of respondents said that no. their views have not changed.

  Here is a sample of the responses.

  • "No. the economy continues to improve at a slow. but steady pace."
  • "No-I keep thinking a slow. hesitant. but undoubted recovery is underway."
  • "No. Until there are enough well-paying jobs created for the unemployed and new job market entrants. my view will not change."
  • "Yes. overall I see progress. but I'm very concerned about the price of gas shutting all that down."
  • "I would say the economy looks better than it did six months ago."

  This week's AAII Sentiment Survey Results:

  • Bullish: 50.7%. down 1.6 percentage points
  • Neutral: 20.2%. down 4.0 percentage points
  • Bearish: 29.1%. up 5.7 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]>