AAII Sentiment Survey: Pessimism Falls Below 40%

For the first time in 11 weeks, pessimism among individual investors about the short-term direction of the stock market is no longer unusually high. At the same time, the latest AAII Sentiment Survey shows optimism at an 11-week high. Neutral sentiment is slightly higher this week as well.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.7 percentage points to 32.1%. Optimism was last higher on June 10, 2020 (34.3%). Though at an 11-week high, bullish sentiment remains below its historical average of 38.0% for the 25th consecutive week and the 30th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased by 1.1 percentage points to 28.3%. This is the 31st time out of 33 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, fell by 2.8 percentage points to 39.6%. Pessimism was last lower on June 10, 2020 (38.1%). Nonetheless, bearish sentiment is above its historical average of 30.5% for the 27th consecutive week and the 29th time this year.

As noted above, pessimism is now below the 40.2% threshold for what counts as an unusually high reading. Both bullish and neutral sentiment are also 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: 32.1%, up 1.7 percentage points
• Neutral: 28.3%, up 1.1 percentage points
• Bearish: 39.6%, down 2.8 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.