AAII Sentiment Survey: Optimism Falters

Optimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, pessimism and neutral sentiment increased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 3.3 percentage points to 30.8%. Bullish sentiment is below its historical average of 37.5% for the third time in four weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 0.3 percentage points to 17.8%. Neutral sentiment is unusually low and is below its historical average of 31.0% for the 36th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 3.1 percentage points to 51.4%. Bearish sentiment is unusually high and is above its historical average of 31.5% for the 40th consecutive week.

The bull-bear spread (bullish minus bearish sentiment) decreased 6.4 percentage points to –20.7%. The bull-bear spread is unusually low and is below its historical average of 6.5% for the 17th consecutive week.

This week’s special question asked AAII members if they intend to make portfolio changes in response to the midterm elections.

Here is how they responded:

• I am not making any significant changes: 73.9%
• I am switching to a more conservative approach: 15.9%
• I am switching to a more aggressive approach: 6.5%
• Not sure/no opinion: 3.6%

See more Sentiment Survey results.