AAII Sentiment Survey: Optimism Rebounds, but Stays Below Average

Optimism among individual investors about the short-term direction of the stock market rebounded in the latest AAII Sentiment Survey. Both neutral and bearish sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 5.9 percentage points to 37.6%. The increase was not large enough to prevent optimism from staying below its historical average of 38.0% for the 40th time this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 2.8 percentage points to 36.3%. Even with the decrease, neutral sentiment is above its historical average of 31.5% for the 29th time in 30 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.1 percentage points to 26.1%. Pessimism is below its historical average of 30.5% for the eighth consecutive week.

At current levels, all three indicators are within their historical ranges.

Most of the responses to this week’s survey were recorded prior to yesterday’s decision by the Federal Open Market Committee (FOMC) to keep interest rates unchanged. The survey period runs from Thursday through Wednesday.

Low interest rates continue to have an impact on individual investors’ allocation decisions, while the ongoing trade war and Washington politics are influencing their expectations for the stock market. Also playing roles are earnings growth, the economy and valuations.

This week’s AAII Sentiment Survey results:

• Bullish: 37.6%, up 5.9 percentage points
• Neutral: 36.3%, down 2.8 percentage points
• Bearish: 26.1%, down 3.1 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.