AAII Sentiment Survey: Optimism at Highest Level in Nearly 3 Months

Optimism about the short-term direction of the stock market rose as pessimism fell. Both bullish and bearish sentiment are at their respective highest and lowest levels in nearly three months. The latest AAII Sentiment Survey also shows a small increase in the number of individual investors describing their outlook as neutral.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 6.7 percentage points to 38.4%. Optimism was last higher on May 8, 2019 (43.1%). The historical average is 38.5%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.3 percentage points to 37.5%. The increase keeps neutral sentiment above its historical average of 31.0% for the 26th time in 27 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 8.0 percentage points to 24.1%. Pessimism was last lower on May 8, 2019 (23.2%). Bearish sentiment is below its historical average of 30.5% for just the third time in 12 weeks.

This is just the eighth time this year that bullish sentiment has been above 38.0%. At current levels, all three indicators are within their typical ranges.

The survey period runs from Thursday through Wednesday. Most of this week’s responses were recorded before yesterday’s rate cut announcement by the Federal Open Market Committee (FOMC).

Many individual investors have been monitoring trade negotiations, particularly between the U.S. and China. The ability of large-cap stocks to stay near record highs may be encouraging some investors, though others still anticipate a drop occurring. 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 and interest rates are also playing in a role.

This week’s AAII Sentiment Survey results:

• Bullish: 38.4%, up 6.7 percentage points
• Neutral: 37.5%, up 1.3 percentage points
• Bearish: 24.1%, down 8.0 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.