AAII Sentiment Survey: Pessimism Extends Streak of Staying Above 40%

Pessimism among individual investors about the short-term direction of the stock market extended its streak of staying above 40%. The latest AAII Sentiment Survey also shows modestly higher levels of bullish sentiment and a small decline in neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 0.4 percentage points to 30.4%. Though at a five-week high, optimism remains below its historical average of 38.0% for the 24th consecutive week and the 29th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 0.6 percentage points to 27.2%. This is the 30th time out of 32 weeks that neutral sentiment is below its historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 0.3 percentage points to 42.4%. Pessimism is above its historical average of 30.5% for the 26th consecutive week and the 28th time this year.

Pessimism is above 40% for the 22nd time out of the past 24 weeks. Bearish sentiment readings above 40.2% are unusually high (more than one standard deviation above average). Both bullish and neutral sentiment are within their typical historical ranges.

The ongoing high 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, valuations, the November elections and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 30.4%, up 0.4 percentage points
• Neutral: 27.2%, down 0.6 percentage points
• Bearish: 42.4%, up 0.3 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.