AAII Sentiment Survey: Neutral Sentiment Continues to Rebound

The percentage of individual investors describing their short-term outlook for stocks as neutral climbed for the sixth consecutive week. The latest AAII Sentiment Survey also shows a rebound in optimism and a pullback in pessimism.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 5.7 percentage points to 30.6%. Nonetheless, optimism remains below its historical average of 38.0% for the eighth consecutive week and the 13th week this year.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.2 percentage points to 25.4%. Though a small change, it marks the sixth consecutive weekly increase and puts neutral sentiment at its highest level in two months. However, neutral sentiment remains below its historical average of 31.5% for the 11th consecutive week and the 15th time in 16 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 6.0 percentage points to 44.0%. Pessimism is above its historical average of 30.5% for the 10th consecutive week.

Bearish sentiment continues to be at an unusually high level for the eighth consecutive week. The breakpoint between typical and unusually high (more than one standard deviation above average) readings is 39.9%. Both bullish and neutral sentiment are within their typical historical ranges.

The continued high level of pessimism reflects the ongoing bear market and the coronavirus pandemic. Some AAII members have been encouraged by the rebound in the stock market from its March lows, however. Many—but not all—have also told us that they have used the downturn to look for buying opportunities among stocks. Other factors influencing AAII members’ sentiment include the November elections, corporate earnings, economic growth and valuations.

This week’s AAII Sentiment Survey results:

• Bullish: 30.6%, up 5.7 percentage points
• Neutral: 25.4%, up 0.2 percentage points
• Bearish: 44.0%, down 6.0 percentage points

Historical averages:

• Bullish: 38.0%
• Neutral: 31.5%
• Bearish: 30.5%

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/sentimentsurvey.

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See more Sentiment Survey results.