AAII Sentiment Survey: Pessimism Plunges to Lowest Level Since March

Pessimism about the short-term direction of the stock market among individual investors plunged to its lowest level in more than seven months. The latest AAII Sentiment Survey also shows a large increase in neutral sentiment.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased by 4.0 percentage points to 30.6%. Optimism was last higher on August 18, 2022 (33.3%). Even with the increase, bullish sentiment remains below its historical average of 38.0% for the 50th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped 8.8 percentage points to 36.5%. Neutral sentiment was last higher on April 21, 2022 (37.3%). This week’s rise puts neutral sentiment above its historical average of 31.5% for just the third time in 28 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 12.8 percentage points to 32.9%. Pessimism was last lower on March 31, 2022 (27.5%). Even with the drop, bearish sentiment remains above its historical average of 30.5% for the 49th time out of the past 50 weeks.

The bull-bear spread (bullish minus bearish sentiment) is –2.3%. It was last higher on March 31, 2022, at 4.3%.

At current levels, all three sentiment indicators and the bull-bear spread are within their typical historical ranges. The last time this occurred was on August 18, 2022.

Most of the results for this week’s survey were recorded prior to yesterday’s rate hike announcement and Federal Reserve chairman Jerome Powell’s press conference.

The rebound in the major stock indexes has helped to improve sentiment. However, individual investors’ short-term expectations are still being influenced by continued volatility in the major stock indexes along with inflation, corporate earnings and increased chatter about the possibility of a recession. Also influencing sentiment are monetary policy, politics and the ongoing invasion of Ukraine by Russia.

See more Sentiment Survey results.