AAII Sentiment Survey: Six-Week Low for Optimism

The percentage of individual investors describing their short-term outlook for stocks as “bullish” is at its lowest level in six weeks. At the same time, the latest AAII Sentiment Survey shows pessimism at a six-week high.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 0.2 percentage points to 24.1%. Optimism was last lower on May 13, 2020 (23.3%). Bullish sentiment is below its historical average of 38.0% for the 16th consecutive week and the 21st week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 0.9 percentage points to 27.0%. Neutral sentiment remains below its historical average of 31.5% for the 19th consecutive week and the 23rd time in 24 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 48.9%. Pessimism was last higher on May 13, 2020 (50.6%). Bearish sentiment is above its historical average of 30.5% for the 18th consecutive week and the 20th time this year.

Optimism remains at an unusually low level (more than one standard deviation below its historical average). Pessimism is at an unusually high level. Historically, both have generally been followed by above-average and above-median returns for the S&P 500 index, though the link is stronger for unusually low bullish sentiment than it is for unusually high bearish sentiment.

The current level of pessimism reflects concerns about the coronavirus pandemic and the economy. However, some AAII members have been encouraged by the rebound in the stock market from its March lows. Other factors influencing AAII members’ sentiment include the economy, corporate earnings, the November U.S. presidential election and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 24.1%, down 0.2 percentage points
• Neutral: 27.0%, down 0.9 percentage points
• Bearish: 48.9%, up 1.1 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.