AAII: The American Association of Individual Investors

AAII Investor Sentiment Survey

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

[

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 8/16/2017

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


HISTORICAL AVERAGE: 38.3%
BULLISH
34.2%
+0.5
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.4%
NEUTRAL
33.0%
-1.0
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.3%
BEARISH
32.8%
+0.5
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:

All three indicators are close to each other for a second week, though optimism remains below average while pessimism is rising for the third consecutive week.

All three indicators in the AAII Sentiment Survey remained close to each other for the second consecutive week. Just 1.4 percentage points separate bullish and bearish sentiment, with neutral sentiment in between the two.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 0.5 percentage points to 34.2%. The modest increase was not enough to prevent optimism from staying below its historical average of 38.5% for the 25th consecutive week and the 30th time out of the last 31 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by a full percentage point to 33.0%. Even with this week’s pullback, neutral sentiment remains above its historical average of 31.0% for the 16th consecutive week and the 21st time out of the last 22 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.5 percentage points to 32.8%. Pessimism was last higher on May 17, 2017 (34.3%). The historical average is 30.5%.

Though up by just a cumulative 0.7 percentage points over the past two weeks, bearish sentiment is now 8.5 percentage points above its 2017 low of 24.3%, set on July 26. Pessimism is also above its historical average on three consecutive weeks for the first time since last April.

While some individual investors are encouraged by this year’s record highs for the major indexes, many others have expressed concern about the possibility of a pullback and/or the prevailing level of valuations. The Trump administration remains at the forefront of many investors’ minds and is having a significant impact on sentiment. Other factors playing roles are earnings and interest rates/monetary policy.

This week’s special question asked AAII members how big of an impact international events and news are having on their outlook for the U.S. stock market. Slightly more than two of out five respondents (41%) said international events and news are having little to no impact on their outlook. Many of these respondents said domestic events are more influential, while several others said they focus on the long term or view international events as having only a temporary impact. About 34% of respondents described international events and headlines as having a moderate impact on their outlook. North Korea was frequently mentioned, as this week’s survey period started last Thursday. Approximately 25% said international events were having a significant impact on their outlook, particularly because of the tensions with North Korea. U.S. president Donald Trump was brought up by respondents in all three of the aforementioned groups.

Here is a sampling of the responses:

  • “International news events come and go over the years and are eventually discounted.”
  • “Not too much. President Trump is all bluster.”
  • “Very much, especially the North Korea crisis.”
  • “Some impact, but less than domestic issues.”
  • “Not much for now, but could change if ‘fire and fury’ becomes more likely.”

Historical averages:

  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

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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