AAII Sentiment Survey: Bearish Sentiment Maintains High, Bullish Stays Unusually Low

The results from the latest AAII Sentiment Survey show pessimism remaining unusually high and optimism remaining unusually low. In addition, the percentage of individual investors who described their outlook for stocks as “neutral” increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 3.4 percentage points to 26.5%. Nonetheless, optimism remains well below its historical average of 38.0%. Bullish sentiment levels are also unusually low for the fourth consecutive week. This is the first time this has happened since the four-week period of June 17 to July 8, 2020.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped by 5.9 percentage points to 29.9%. The historical average is 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased by 9.3 percentage points to 43.7%. This is bearish sentiment’s 11th consecutive week above its historical average of 30.5% and its third consecutive week at an unusually high level.

Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following an unusually low reading for bullish sentiment. Six-month returns following an unusually high bearish sentiment reading have also tended to be above-average and above-median.

Inflation, interest rates, the coronavirus pandemic and politics are all influencing individual investors’ outlook for stocks. Other factors include the economy and corporate earnings. The ongoing volatility in the stock market is likely also playing a role.

The return to normalcy from the coronavirus pandemic, monetary and fiscal stimulus and inflationary pressures are influencing individual investors’ outlook for stocks. Other factors include earnings, valuations and the Biden administration’s initiatives.

See more Sentiment Survey results.