AAII Sentiment Survey: Bulls Stay Consistent with Positive Psychology

Bullish sentiment edged up slightly, while bearish sentiment stayed at unusually low levels in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.3 percentage points to 49.1%. This is the highest level of optimism registered by the survey since February 10, 2011, when bullish sentiment reached 49.4%. The historic average is 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, slipped 0.3 percentage points to 33.7%. Even with the decrease, neutral sentiment is above its historical average of 31% for the third time in the past four weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, was unchanged at 17.2%. Pessimism not only stayed at its lowest level since December 23, 2010, it also remained at a reading that is more than one standard deviation below the historical average of 30%.

The positive start to 2012 is keeping individual investors hopeful about the short-term direction of stock prices. The survey results also continue to reflect an overall improvement in moods with bullish sentiment now above its historical average for nine out of the last 14 weeks. Even with the improvement in sentiment, individual investors still remain concerned about the pace of economic growth, Washington politics and the European sovereign debt crisis.

This week’s AAII Sentiment Survey results:

  • Bullish: 49.1%, up 0.3 percentage points
  • Neutral: 33.7%, down 0.3 percentage points
  • Bearish: 17.2%, unchanged

Charles Rotblut is the author of the new book Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio. The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at http://www.aaii.com/sentimentsurvey