AAII Sentiment Survey: Optimism Below 20% for Fourth Time in Seven Weeks

Optimism about the short-term direction of the stock market is below 20% for the fourth time in seven weeks according to the latest AAII Sentiment Survey. Pessimism, meanwhile, is above 50% for the fourth time in five weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, pulled back by 6.1 percentage points to 19.8%. The decline keeps optimism below its historical average of 38.0% for the 27th consecutive week and at an unusually low level for the 17th time out of the last 20 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 3.0 percentage points to 26.7%. Even with the increase, neutral sentiment levels are below the historical average of 31.5% for the fifth consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.1 percentage points to 53.5%. This is the 26th time out of the past 27 weeks that pessimism is above its historical average of 30.5% and the 16th time out of the last 19 weeks that bearish sentiment is unusually high.

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.