AAII Sentiment Survey: Optimism Rises to a Six-Month High

Optimism among individual investors about the short-term direction of the stock market is at its highest level in six months. The latest AAII Sentiment Survey also shows the percentage of investors describing their outlook as “bearish” being at a four-month low.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 8.5 percentage points to 34.7%. Optimism was last higher on April 15, 2020 (34.9%). Even with this week’s large increase, bullish sentiment remains below its historical average of 38.0% for the 31st consecutive week and the 36th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 4.4 percentage points to 26.3%. This is the 37th time out of the past 39 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, decreased by 4.1 percentage points to 39.0%. Pessimism was last lower on June 10, 2020 (38.1%). Nonetheless, bearish sentiment is above its historical average of 30.5% for the 33rd consecutive week and the 35th time this year.

This week’s upward move puts bullish sentiment back within its typical historical range. The pullback in bearish sentiment also put it back within its typical historical range (a reading below 40.2%) for the first time in six weeks.

The improvement in optimism is occurring as major indexes continue to rebound from September lows. As noted above, optimism continues to be below average while pessimism continues to be above average. This differential reflects ongoing concerns about the coronavirus pandemic, the economy and the upcoming election. Other factors influencing AAII members’ sentiment include valuations and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 34.7%, up 8.5 percentage points
• Neutral: 26.3%, down 4 percentage points
• Bearish: 39.0%, down 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.