AAII Sentiment Survey: Five-Week Low for Optimism

The percentage of individual investors describing their short-term outlook for stocks as “bullish” is at its lowest level in five 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, dropped 7.1 percentage points to 23.7%. Optimism was last lower on August 5, 2020 (23.3%). Bullish sentiment remains below its historical average of 38.0% for the 27th consecutive week and the 32nd week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose by 0.4 percentage points to 27.8%. This is the 33rd time out of 35 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, rose by 6.7 percentage points to 48.5%. Pessimism is at a six-week high, tied with its July 29, 2020, reading. Bearish sentiment is above its historical average of 30.5% for the 29th consecutive week and the 31st time this year.

Optimism is back at an unusually low level (more than one standard deviation below its historical average). Additionally, pessimism continues to stay at an unusually high level. Pessimism is above 40% for the 24th time out of the past 27 weeks.

The persisting high level of pessimism reflects concerns about the coronavirus pandemic and the economy. The recent decline in the Nasdaq composite may have also played a role. 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: 23.7%, down 7.1 percentage points
• Neutral: 27.8%, up 0.4 percentage points
• Bearish: 48.5%, up 6.7 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.