AAII Sentiment Survey: Neutral Sentiment Pulls Back

The percentage of individual investors describing their outlook for stock prices as “neutral” pulled back after hitting its second-highest level of the year last week. This week’s AAII Sentiment Survey also shows small increases in optimism and pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.8 percentage points to 35.0%. Optimism is below its historical average of 38.5% for the fifth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 2.9 percentage points to 36.7%. The small drop extends the streak of range-bound readings (35.3% to 39.8%) to 10 consecutive weeks. Neutral sentiment is also above its historical average of 31.0% for the 11th time in 13 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 28.3%. This is the eighth time in nine weeks that pessimism is below its historical average of 30.5%.

At current levels, all three indicators are within their typical 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, 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: 35.0%, up 1.8 percentage points
• Neutral: 36.7%, down 2.9 percentage points
• Bearish: 28.3%, up 1.1 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.