AAII Sentiment Survey: Pessimism Rebounds, Still Below Average

Pessimism among individual investors about the short-term direction of stock prices rebounded but remains below average. The latest AAII Sentiment Survey also shows declines in bullish and neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.2 percentage points to 37.4%. Optimism was last lower on February 13, 2019 (35.1%). The historical average is 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 2.5 percentage points to 35.9%. During the last six weeks, neutral sentiment has fluctuated within a range of 35.3% to 39.8%. Neutral sentiment is above its historical average of 31.0% for the seventh time in nine weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 6.7 percentage points to 26.7%. The increase was not large enough to prevent pessimism from staying below its historical average of 30.5% for the fifth consecutive week.

As noted above, the rebound in bearish sentiment followed what was an unusually low reading last week. At current levels, all three indicators are within their historical ranges.

This year’s rebound in stock prices has encouraged some individual investors, though others have concerns about its sustainability. Many individual investors are monitoring trade negotiations, and the tempering of tensions may be having an impact on sentiment. Also having an influence are Washington politics (including President Trump and Democratic control of the House of Representatives), corporate earnings, the Federal Reserve, valuations and concerns about the pace of economic growth.

This week’s AAII Sentiment Survey results:

• Bullish: 37.4%, down 4.2 percentage points
• Neutral: 35.9%, down 2.5 percentage points
• Bearish: 26.7%, up 6.7 percentage points

Historical averages:

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

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/sentimentsurvey.

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