Optimism among individual investors rose to its highest level in five weeks, though pessimism remains at an unusually high level. The latest AAII Sentiment Survey also shows an increase in neutral sentiment.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.4 percentage points to 36.6%. This is the highest reading since March 4, 2020 (38.7%). Even with the increase, optimism is below its historical average of 38.0% for the 10th week this year.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.7 percentage points to 18.7%. Neutral sentiment remains below its historical average of 31.5% for the 12th time in 13 weeks.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.1 percentage points to 44.7%. Pessimism is above its historical average of 30.5% for the seventh consecutive week.
Though neutral sentiment is continuing to rebound, it remains at a very low level. This week’s neutral reading ranks as the 113th lowest out of more than 1,700 weekly results.
Pessimism continues to be at an unusually high level (more than one standard deviation above the historical average). Historically, unusually high levels of bearish sentiment have had a weaker association with above-average returns for the S&P 500 index over the following six- and 12-month periods than unusually low levels of optimism. (Bullish sentiment remains within its typical historical range.)
The continued high level of pessimism reflects the ongoing bear market and the coronavirus pandemic. Some AAII members may be encouraged by the rebound in the stock market. Many—but not all—have also told us that they have been using 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.
As of April 9, 2020
American Association of Individual Investors
This week’s AAII Sentiment Survey results:
- Bullish: 36.6%, up 2.4 percentage points
- Neutral: 18.7%, up 2.7 percentage points
- Bearish: 44.7%, down 5.1 percentage points
- Bullish: 38.0%
- Neutral: 31.5%
- Bearish: 30.5%
The AAII Sentiment Survey has been conducted weekly since July 1987. The survey and its results are available online.
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