AAII Sentiment Survey: Optimism and Pessimism Back at Unusual Levels

The results from the latest AAII Sentiment Survey show optimism falling back to an unusually low level and pessimism rebounding up to an unusually high level. Neutral sentiment moved closer to its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased by 6.4 percentage points to 24.0%. This is below the threshold of 28.0% separating typical and unusually low readings. Optimism is below its historical average of 38.0% for the 16th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased by 2.0 percentage points to 30.2%. This is the third consecutive week that neutral sentiment is below the historical average of 31.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased by 4.3 percentage points to 45.8%. This is above the threshold of 40.1% separating typical and unusually high readings. Pessimism is above its historical average of 30.5% for the 16th consecutive week.

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 unusually low readings for bullish sentiment and for the bull-bear spread. (This week’s bull-bear spread of –21.8% is also unusually low.) Unusually high bearish sentiment readings historically have been followed by above-average and above-median six-month returns in the S&P 500.

The ongoing invasion of Ukraine by Russia, stock market volatility, inflation, interest rates, the coronavirus pandemic and politics are all influencing individual investors’ outlook for stocks. Other factors include the economy and corporate earnings.

See more Sentiment Survey results.