AAII Sentiment Survey: Neutral Sentiment Rises to An Unusually High Level

The percentage of individual investors describing their short-term outlook for stocks as “neutral” is at an unusually high level for the first time in nine months. Pessimism also rose in the latest AAII Sentiment Survey, while optimism fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 2.7 percentage points to 37.6%. The decline puts optimism back below its historical average of 38.5% for the sixth time in seven weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.3 percentage points to 40.6%. Neutral sentiment was last higher on July 26, 2018 (41.6%). This week’s increase keeps neutral sentiment above its historical average of 31.0% for the 13th time in 15 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 1.4 percentage points 21.8%. This is the 10th time in 11 weeks that bearish sentiment is below its historical average of 30.5%. 

Neutral sentiment is now at an unusually high level (more than one standard deviation above the historical average). Historically, such readings have been followed by slightly better-than-average six-month returns in the S&P 500 index. Bearish sentiment is back within its typical range after having fallen to an unusually low level last week.

This week’s AAII Sentiment Survey results:

• Bullish: 37.6%, down 2.7 percentage points
• Neutral: 40.6%, up 1.3 percentage points
• Bearish: 21.8%, up 1.4 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.