AAII Sentiment Survey: Optimism Drops

Individual investors’ optimism about the short-term direction of stocks reversed its recent gains, falling to a four-week low. The latest AAII Sentiment Survey also shows increases in pessimism and neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell by 4.2 percentage points to 31.7%. Optimism is below its historical average of 38.5% for the 11th consecutive week and the 23rd time this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose by 0.8 percentage points to 36.2%. The modest increase keeps neutral sentiment above its historical average of 31.0% for the 25th time in 26 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.4 percentage points to 32.0%. The increase puts pessimism above its historical average of 30.5% for the ninth time in 11 weeks.

All three indicators are currently within their typical ranges.

Many individual investors have been monitoring trade negotiations, particularly between the U.S. and China. The rebound in stock prices may have relieved some concerns about a steeper decline occurring, though others still anticipate a larger drop than what occurred this spring. Also having an influence are Washington politics (including President Trump), geopolitics, valuations and corporate earnings. Perceptions of the pace of economic growth, along with monetary policy, interest rates and valuations are also playing in a role.

This week’s AAII Sentiment Survey results:

• Bullish: 31.7%, down 4.2 percentage points
• Neutral: 36.2%, up 0.8 percentage points
• Bearish: 32.0%, up 3.4 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.