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 6/21/2017

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


HISTORICAL AVERAGE: 38.3%
BULLISH
32.7%
+0.4
Percentage point
change from
last week
HISTORICAL AVERAGE: 31.3%
NEUTRAL
38.4%
+0.2
Percentage point
change from
last week
HISTORICAL AVERAGE: 30.3%
BEARISH
28.9%
-0.6
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:

Pessimism declined to a four-month low, but continues to remain close to its historical average.

A modest decrease in the percentage of individual investors who expect stock prices to decline sent pessimism to a four-month low. Bearish sentiment, however, remains close to its historical average in the latest AAII Sentiment Survey. Additionally, this week’s survey shows small increases in optimism and neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 0.4 percentage points to 32.7%. Optimism is below its historical average of 38.5% for the 17th consecutive week and the 22nd time out of the last 23 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose by a mere 0.2 percentage points to 38.4%. This is both the eighth consecutive week and the 13th out of the last 14 weeks with a neutral sentiment reading above its historical average of 31.0%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 0.6 percentage points to 28.9%. Pessimism was lower on February 15, 2017 (27.7%). Bearish sentiment has been slightly below its historical average of 30.5% during six out of the last seven weeks.

Record highs for the S&P 500 and the NASDAQ have encouraged some individual investors, but the Trump administration’s ability (or lack thereof) to move forward on economic and tax policy remains on the forefront of many others’ minds. Also, playing a role in influencing sentiment are earnings, valuations, concerns about the possibility of a pullback in stock prices and interest rates/monetary policy.

This week’s special question asked AAII members how this year’s rate hikes and the Federal Reserve’s intention to further tighten monetary policy are impacting their market outlook. Slightly more than half of all respondents (51%) said the hikes are either having no impact or only a minimal impact on their outlook. Several of these respondents said the gradual removal of stimulus was already factored into the market. About 22% thought the rate hikes were a positive sign, primarily because they reflect improving economic conditions. Approximately 11% of respondents had the opposite view and think the rate hikes could be bad for stocks. Many of them expressed concerns about a forthcoming pullback in stock prices.

Here is a sampling of the responses:

  • “The markets have already priced in rates hikes; no change in my market outlook.”
  • “Makes me more bullish. The Fed is showing confidence in the economy.”
  • “I believe the anticipated Fed’s moves will have a neutral effect on the market. Political impacts...who knows?!”
  • “Rate hikes and overbought equities make me think a correction is coming.”

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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