AAII Sentiment Survey: Optimism Still Below 30%

Optimism among individual investors about the short-term direction of the stock market rebounded but remains below 30% for the fifth consecutive week. The latest AAII Sentiment Survey also shows pessimism remaining at an unusually high level.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 2.5 percentage points to 28.6%. Optimism was last higher on July 31, 2019 (38.4%). Optimism is below its historical average of 38.0% for the 28th time this year and the 16th time in 17 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, is 0.2 percentage points higher at 31.9%. The small increase keeps neutral sentiment above its historical average of 31.5% for the 15th time in 16 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, pulled back by 2.7 percentage points to 39.5%. Pessimism remains above its historical average of 30.5% for the 14th time in 17 weeks.

Bullish sentiment is back within its typical range, though barely so. The breakpoint between typical and unusually low readings is 28.0%. Pessimism, meanwhile, continues to be at an unusually high level. Historically, the S&P 500 index has experienced above-median returns during the six- and 12-month periods following unusually high levels of pessimism.

Many individual investors have been monitoring trade negotiations, particularly between the U.S. and China. Additionally, many AAII members expect a recession to start within the next 12 to 24 months. Also having an influence on sentiment are Washington politics, geopolitics, valuations, corporate earnings, monetary policy and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 28.6%, up 2.5 percentage points
• Neutral: 31.9%, up 0.2 percentage points
• Bearish: 39.5%, down 2.7 percentage points

Historical averages:

• Bullish: 38.0%
• Neutral: 31.5%
• 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.