AAII Sentiment Survey: Bullish and Bearish Sentiment Both Rise

The percentage of individual investors describing their outlook for stocks as “bullish” rose, as did the percentage of those describing their outlooks as “bearish” in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased by 1.6 percentage points to 26.0%. Even with this week’s rise, optimism is below its historical average of 38.0% for the 26th consecutive week and is unusually low for the 16th time out of the last 18 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased by 3.0 percentage points to 23.6%. Neutral sentiment levels are below the historical average of 31.5% for the fourth consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased by 1.4 percentage points to 50.4%. This is the 25th time out of the past 26 weeks that pessimism is above its historical average of 30.5% and the 15th time out of the last 18 weeks that bearish sentiment is unusually high.

Most of this week’s results were recorded prior to yesterday’s large market drop.

As noted above, bullish sentiment remains unusually low while bearish sentiment continues to be unusually high. The bull-bear spread (bullish minus bearish sentiment) is also unusually low.

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. Unusually high bearish sentiment readings historically have also been followed by above-average and above-median six-month returns in the S&P 500.

Besides the downward volatility in the stock market, 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.