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 10/18/2017

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


HISTORICAL AVERAGE: 38.3%
BULLISH
37.9%
-1.8
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.4%
NEUTRAL
34.1%
+0.8
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.3%
BEARISH
27.9%
+1.0
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:

This week’s decline in bullish sentiment puts optimism below its historical average for the 36th time this year.

The percentage of individual investors describing their short-term outlook for stocks as “bullish” is back below its historical average, as it has been throughout most of this year. The latest AAII Sentiment Survey also shows increases in neutral and bearish sentiment. 
 
Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.8 percentage points to 37.9%. The historical average is 38.5%.
 
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 0.8 percentage points to 34.1%. This is the 25th consecutive week that neutral sentiment is above its historical average of 31.0%.
 
Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 1.0 percentage points to 27.9%. Pessimism is below its long-term historical average of 30.5% for the fifth time in six weeks.
 
This is the 36th week this year with a bullish sentiment reading below its historical average. At current levels, all three sentiment readings are well within their typical ranges.
 
Political drama in Washington remains at the forefront of many individual investors’ minds. (Many are skeptical about the prospects of tax reform being passed.) Valuations are also playing a role, creating concern among some about stocks being overpriced and potentially leading to a correction. Similarly, there are concerns about the current lack of volatility being followed by a downward price move. Some individual investors, however, are encouraged by the continuing economic and earnings growth as well as the market’s upward momentum.
 
This week’s special question asked AAII members how the market’s lack of volatility this year has affected their sentiment toward stocks. Respondents were split. Approximately 44% described themselves as being cautious or feeling nervous about a forthcoming drop in stock prices. Many of these respondents do not expect the current low level of volatility to last. The second largest group, representing 42% of respondents, says the lack of volatility isn’t impacting their outlook. Some of these respondents describe themselves as not being swayed by volatility or being long-term investors. Just under 12% are encouraged by the lack of volatility.
 
Here is a sampling of the responses:
  • “It has made me more concerned about a forthcoming correction, which is way overdue.”
  • “None. I’m a long-term investor.”
  • “My stock allocation has not changed.”
  • “It makes me more willing to buy individual stocks.”
  • “Nervous. It appears the market is betting on legislative outcomes that are becoming likely to occur.”

To keep reading »

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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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