AAII Sentiment Survey: Pessimism Above 50% for Third Consecutive Week

Pessimism among individual investors about the short-term direction of the stock market remains above 50% for the third consecutive week. The latest AAII Sentiment Survey also shows neutral sentiment remaining extraordinarily low.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined by 1.4 percentage points to 32.9%. Optimism has been below its historical average of 38.0% during eight out of the first 13 weeks of 2020.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased by a slight 0.5 percentage points to 15.0%. Neutral sentiment remains below its historical average of 31.5% for the 10th time in 11 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 0.9 percentage points to 52.1%. Pessimism is above 50% for three consecutive weeks for the first time since February 19, 2009, through March 5, 2009. The historical average is 30.5%.

Neutral sentiment is at an extraordinarily low level for the second consecutive week. This week’s neutral sentiment ties with August 7, 1987, and July 13, 2000, for the 29th lowest out of more than 1,700 weekly results.

Pessimism continues to be at an unusually high level (more than one standard deviation above the historical average). Historically, unusually high levels of bearish sentiment have had a weaker association with above-average returns for the S&P 500 index over the following six- and 12-month periods than unusually low levels of optimism. (Bullish sentiment remains within its typical historical range.)

The continued high level of pessimism reflects the ongoing bear market, the coronavirus pandemic and, to a lesser extent, the oil price cut announced by Saudi Arabia. Many—but not all—individual investors are using the downturn to look for buying opportunities among stocks. Other factors influencing AAII members’ sentiment include the November elections, corporate earnings, economic growth and valuations.

This week’s AAII Sentiment Survey results:

• Bullish: 32.9%, down 1.4 percentage points
• Neutral: 15.0%, up 0.5 percentage points
• Bearish: 52.1%, up 0.9 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.