AAII Sentiment Survey: Optimism Drops to a 10-Month Low

Optimism among individual investors about the short-term direction of the stock market is at a 10-month low. The latest AAII Sentiment Survey also shows higher levels of neutral and bearish sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 8.0 percentage points to 21.4%. Optimism was last lower on December 12, 2018 (20.9%). Bullish sentiment is below its historical average of 38.0% for the 32nd time this year and the 20th time in 21 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.8 percentage points to 39.2%. Neutral sentiment was last at this level on May 22, 2019. This was the fifth consecutive weekly increase. The rise keeps neutral sentiment above its historical average of 31.5% for the 19th time in 20 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped by 6.2 percentage points to 39.4%. Pessimism remains above its historical average of 30.5% for the ninth time in 11 weeks.

Bullish sentiment is back at an unusually low level for the first time in five weeks. Historically, such readings have been followed by higher-than-average and higher-than-median six- and 12-month S&P 500 index returns. Both neutral and bearish sentiment are within but near the upper end of their respective typical ranges.

This week’s drop in bullish sentiment follows the return of downside volatility to the stock market and weaker-than-expected economic reports.

Many individual investors have been monitoring trade negotiations, particularly between the U.S. and China. 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: 21.4%, down 8.0 percentage points
• Neutral: 39.2%, up 1.8 percentage points
• Bearish: 39.4%, up 6.2 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.