AAII Sentiment Survey: Highest Optimism Since 2018

Optimism among individual investors about the short-term direction of the stock market reached a 15-month high in the latest AAII Sentiment Survey. Meanwhile, both neutral and bearish sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.8 percentage points to 45.6%. Optimism was last higher on October 3, 2018 (45.7%). The historical average is 38.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.0 percentage points to 29.6%. This is the first time in a year that neutral sentiment is below its historical average of 31.5% on back-to-back weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 2.7 percentage points to 24.8%. The drop keeps pessimism below its historical average of 30.5% for the 14th consecutive week.

All three indicators are currently well within their typical historical ranges.

Optimism is above its historical average for the fourth time in six weeks. Whether this is a shift in trend remains to be seen. Bullish sentiment has not stayed above its historical average for a period of longer than two consecutive weeks since September 2018. It has not had a streak of above-average readings lasting more than three consecutive weeks since January 2018.

The market’s upward trend combined with low volatility and the phase-one trade deal between the U.S. and China are contributing to the higher level of individual investor optimism. Also influencing expectations about the direction of stock prices are the November elections, Washington politics, earnings growth, monetary policy, the economy and valuations.

This week’s AAII Sentiment Survey results:

• Bullish: 45.6%, up 3.8 percentage points
• Neutral: 29.6%, down 1.0 percentage points
• Bearish: 24.8%, 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.

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership

See more Sentiment Survey results.