AAII Sentiment Survey: Optimism Nears 2022 High, but Still Below Average

The results from the latest AAII Sentiment Survey saw bullish sentiment rebounding for the second consecutive week. Neutral sentiment also rebounded, while bearish sentiment significantly decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 7.0 percentage points to 30.4%. Optimism was last higher on January 6, 2022 (32.8%). Even with the rise, bullish sentiment remains below its historical average of 38.0% for the 15th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased by 5.2 percentage points to 28.2%. This is the second consecutive week that neutral sentiment is below its historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months plunged 12.2 percentage points to 41.4%. Even with the steep drop, pessimism is still above its historical average of 30.5% for the 15th consecutive week.

Bullish sentiment is back within its typical range for the first time in eight weeks. Pessimism, however, remains unusually high for the third consecutive week. Historically, unusually high bearish sentiment readings have been followed by above-average and above-median six-month returns in the S&P 500 index.

The ongoing invasion of Ukraine by Russia, 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.

In this week’s special question, we asked AAII members how oil prices are impacting their outlook for stocks. Slightly more than one-third of respondents (34%) say that they have a bearish outlook on stocks due to the rising oil prices.

Conversely, 26% of respondents say that oil prices are having little to no impact on their outlook. Approximately, 19% view the rise in oil prices as a buying opportunity for stocks, particularly those in the energy sector. Roughly 14% of respondents have a mixed outlook.

Here is a sampling of the responses:

• “Higher oil prices are usually bad for stocks.”
• “No impact; prices go up, prices go down. If the war in Ukraine continues, then the price will go up, but the war will influence my outlook, not the price of oil.”
• “All things delivered, all things made with chemicals, all transportation, food bills and utility bills are going to continue to increase. Anything that reduces costs for any of these items may be a good investment.”
• “I am not sure that oil prices will have the biggest effect on stocks. I think the Russian invasion of Ukraine will have a bigger effect, although the two are tied together.”

See more Sentiment Survey results.