AAII Sentiment Survey: Optimism Stays Above 40%

Optimism among individual investors about the short-term direction of the stock market stayed above 40%, albeit barely, for the second consecutive week in the latest AAII Sentiment Survey. Pessimism rebounded while neutral sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased by 0.8 percentage points to 40.6%. Optimism is above 40% on back-to-back weeks for the fourth time in 16 weeks. The historical average is 38.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 1.5 percentage points to 30.8%. The drop puts neutral sentiment below its historical average of 31.5% for the fifth time in six weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.3 percentage points to 28.7%. Even with the increase, pessimism is below its historical average of 30.5% for the 16th time in 18 weeks.

All three indicators are currently within their typical historical ranges.

Prior to November 6, 2019, and November 13, 2019, bullish sentiment has not been above 40% on back-to-back weeks since August 2018. Whether the recent change represents a shift toward a more consistent streak of near- and above-average optimism remains to be seen.

The COVID-19 (coronavirus) outbreak has dampened the economic outlook for some but not all individual investors. Also affecting individual investor sentiment is the market’s upward trend, valuations, the phase-one trade deal between the U.S. and China, the November elections, Washington politics, earnings growth, monetary policy and the economy.

This week’s AAII Sentiment Survey

• Bullish: 40.6%, down 0.8 percentage points
• Neutral: 30.8%, down 1.5 percentage points
• Bearish: 28.7%, up 2.3 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.