AAII Sentiment Survey: Optimism Dips, but Stays Above Average for 23rd Week

Bullish sentiment declined 2.1 percentage points to 49.4% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months was above its historical average of 39% for the 23rd consecutive week. This is the second longest such streak since 2004. (Bullish sentiment stayed above its historical average for the 42 consecutive weeks between May 29, 2003, and March 11, 2004.)

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rose 2.1 percentage points to 23.7%. This was the 27th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, was unchanged at 26.9%. This was the 19th time in the past 22 weeks that pessimism has been below its historical average of 30%.

Bullish sentiment came in below 50% for only the second time in the past 10 weeks. Despite this week’s dip, bullish sentiment remains at high levels. It is worth noting that during the past 10-weeks, volatility has largely been absent from the markets, with the S&P 500 posting a gain or loss bigger than 1% on just a handful of days. The calm markets, combined with rising stock prices and better-than-expected earnings, are keeping investors optimistic.

This week’s special question asked AAII members which sectors and industries they like right now. Energy was named by the largest number of respondents, followed by technology and commodities/basic materials. In a distant third were financials and health care. When the same question was asked last October, AAII members said they liked technology, followed by commodities, gold, energy, financials, and health care.

This week’s AAII Sentiment Survey results

  • Bullish: 49.4%, down 2.1 percentage points
  • Neutral: 23.7%, up 2.1 percentage points
  • Bearish: 26.9%, no change

Historical Averages

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

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

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