AAII: The American Association of Individual Investors

AAII Investor Sentiment Survey

Since 1987, AAII members have been answering the same simple question each week:

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Do you feel the direction of the market over the next six months will be up (bullish), no change (neutral) or down (bearish)?

]

The results are compiled into the AAII Investor Sentiment Survey,
which offers insight into the mood of individual investors.

Survey Results for Week Ending 7/18/2018

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


HISTORICAL AVERAGE: 38.3%
BULLISH
34.7%
-8.4
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.4%
NEUTRAL
40.4%
+12.6
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.3%
BEARISH
24.9%
-4.2
Percentage point
change from
last week

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

The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications including Barron's and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals.

AAII Sentiment Survey:

Neutral sentiment rebounded strongly, rising to both a two-month high and an unusually high level.

The percentage of individual investors describing their short-term outlook for stock prices as “neutral” rebounded strongly in the latest AAII Sentiment Survey. Optimism pulled back, as did pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 8.4 percentage points to 34.7%. The drop puts optimism back below its historical average of 38.5% for the third time in four weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped by 12.6 percentage points to 40.4%. Neutral sentiment was last higher on May 16, 2018 (42.7%). The historical average is 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell by 4.2 percentage points to 24.9%. This is a five-week low. Pessimism is below its historical average of 30.5% for the 12th time in the past 14 weeks.

At its current level, neutral sentiment is back at an unusually high level, albeit barely so. The cutoff between a typical and unusually high reading is 40.0% (one standard deviation above average).

Many—but not all—individual investors anticipate continued volatility and/or think that the current political backdrop could have a further impact on the stock market. Trade policy is influencing some individual investors’ sentiment as well. While many approve of the Federal Reserve’s plan to continue gradually raising interest rates, some AAII members are concerned about the impact that rising rates will have. Also influencing sentiment are valuations, tax cuts, earnings growth and economic growth.

This week’s special question asked AAII members for their perception of the current state of the housing market. Nearly one out of three respondents (32%) describe housing as lacking enough inventory (especially for entry-level homes) or otherwise being too expensive. An additional 18% say prices are at risk of declining, with rising interest rates cited as a primary catalyst. Approximately 11% described the current environment as a seller’s market, while nearly 19% think the housing market will remain strong.

Here is a sampling of the responses:

  • “Tight with low availability, especially for first-time buyers.”
  • “Bubble developing. Too little inventory and rising interest rates spell trouble.”
  • “It appears to be a seller’s market with prices increasing.”
  • “A bit overpriced, but likely to stay that way.”
  • “As long as interest rates don’t spike, housing will remain strong.”

To keep reading »

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AAII Investor

Sentiment Survey

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

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

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




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