AAII Sentiment Survey: Neutral Sentiment Nears 40%

Neutral sentiment rose to its second-highest level of the year, nearing 40%. The latest AAII Sentiment Survey also shows higher pessimism and lower optimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 4.1 percentage points to 33.2%. Optimism is below its historical average of 38.5% for the fourth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.3 percentage points to 39.6%. The increase puts neutral sentiment near the upper end of its nine-week range of 35.3% to 39.8%. This is the 10th time in 12 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, rebounded by 3.8 percentage points to 27.2%. This is the seventh time in eight weeks that pessimism is below its historical average of 30.5%.

At current levels, all three indicators are within their typical historical ranges. The boundary between typical and unusually high neutral sentiment readings is 40.0%.

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, though the impact varies by investor. 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: 33.2%, down 4.1 percentage points
• Neutral: 39.6%, up 0.3 percentage points
• Bearish: 27.2%, up 3.8 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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See more Sentiment Survey results.