AAII Sentiment Survey: Optimism Jumps to a New 2019 High

Optimism among individual investors about the short-term direction of the stock market is at its highest level of the year. The latest AAII Sentiment Survey also shows an unusually low level of pessimism and a small decline in neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 6.5 percentage points to 44.1%. Optimism was last higher on October 3, 2018 (45.7%). Bullish sentiment is above its historical average of 38.0% for just the 11th time this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, is 0.9 percentage points lower at 35.4%. Even with the decrease, neutral sentiment remains above its historical average of 31.5% for the 30th time in 31 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 5.6 percentage points to 20.5%. Pessimism was last lower on April 24, 2019 (20.2%). Bearish sentiment is below its historical average of 30.5% for the ninth consecutive week.

At its current level, pessimism is unusually low. Historically, the S&P 500 has gone on to realize below-average, though still positive, returns over the six- and 12-month periods following such readings. Both bullish sentiment and neutral sentiment are within their typical historical ranges.

The trade war has long been an issue affecting individual investors’ outlook for the stock market. The recent trade agreement between the U.S. and China combined with the recent highs in the stock market may have combined to boost optimism among AAII members. (For the survey period starting today, we’re asking respondents specifically about what impact the trade agreement is having on their sentiment toward stocks.) Also influencing individual investors’ market outlook is Washington politics, earnings growth, the economy and valuations.

This week’s AAII Sentiment Survey results

• Bullish: 44.1%, up 6.5 percentage points
• Neutral: 35.4%, down 0.9 percentage points
• Bearish: 20.5%, down 5.6 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.