AAII Sentiment Survey: Optimism Pulls Back After Big Rise

Optimism among individual investors about the short-term outlook for stocks pulled back following last week’s big increase. The latest AAII Sentiment Survey also shows a large rebound in neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 11.5 percentage points to 44.4%. This is the first time that optimism is above its historical average of 38.0% on consecutive weeks since mid-February.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 10.0 percentage points to 29.3%. Even with the increase, neutral sentiment remains below its historical average of 31.5% for the 43rd time out of the past 45 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.5 percentage points to 26.4%. This is the first time that pessimism is below its historical average of 30.5% on consecutive weeks since mid-February.

All three indicators are now back within their typical historical ranges.

The positive results from Pfizer’s and Moderna’s late-stage trials have made many individual investors either more optimistic or, at least, less pessimistic. Concern about the shorter-term trends in coronavirus cases and the resulting economic impact remain, however. Also influencing individual investors’ sentiment are the outcome of the election, valuations and interest rates.

This week’s AAII Sentiment Survey results:

• Bullish: 44.4%, down 11.5 percentage points
• Neutral: 29.3%, up 10.0 percentage points
• Bearish: 26.4%, down 1.5 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.