AAII Sentiment Survey: Biggest Weekly Drop in Optimism Since June

Optimism among individual investors about the short-term direction of the stock market experienced its biggest weekly percentage-point decline since June 2020. The latest AAII Sentiment Survey also shows higher levels of neutral and bearish sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, dropped by 7.1 percentage points to 24.9%. Bullish sentiment remains below its historical average of 38.0% for the 29th consecutive week and the 34th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.5 percentage points to 29.1%. This is the 35th time out of the past 37 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, increased by 5.6 percentage points to 46.0%. Bearish sentiment is above its historical average of 30.5% for the 31st consecutive week and the 33rd time this year.

Optimism is back at an unusually low level (more than one standard deviation below its historical average). Pessimism continues to stay at an unusually high level. Pessimism is above 40% for the 26th time out of the past 29 weeks.

The persisting high level of pessimism reflects concerns about the coronavirus pandemic, the economy and the upcoming election. The recent decline in the Nasdaq composite may have also played a role. Other factors influencing AAII members’ sentiment include the economy, valuations and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 24.9%, down 7.1 percentage points
• Neutral: 29.1%, up 1.5 percentage points
• Bearish: 46.0%, up 5.6 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.