AAII Sentiment Survey: Pessimism Rebounds Above 40%

Pessimism among individual investors about the short-term direction of the stock market rebounded, continuing its streak of staying above 40%. The latest AAII Sentiment Survey also shows small declines in bullish and neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.3 percentage points to 30.8%. Bullish sentiment remains below its historical average of 38.0% for the 26th consecutive week and the 31st week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell by 0.9 percentage points to 27.4%. This is the 32nd time out of 34 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 2.1 percentage points to 41.8%. Bearish sentiment is above its historical average of 30.5% for the 28th consecutive week and the 30th time this year.

Pessimism is above 40% for the 23rd time out of the past 26 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 persisting 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 market from its March lows and positive second-quarter earnings. Other factors influencing AAII members’ sentiment include the economy, corporate earnings, valuations, unemployment, the November elections and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 30.8%, down 1.3 percentage points
• Neutral: 27.4%, down 0.9 percentage points
• Bearish: 41.8%, up 2.1 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.