AAII Sentiment Survey Results For Frame Ended 15 July 2015

AAII Sentiment Survey Results For Frame Ended 15 July 2015

The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly voting frame.

Data represents what direction members feel the stock market will be in the next 6 months.

AAII Investor Setiment Survey Update

This week’s results, as follows:

Bullish: 30.8%, + 2.9

Neutral: 45.9%, + 3.0

Bearish: 23.2%, – 5.9

Change from last week:

Bullish: +2.9
Neutral: +3.0
Bearish: -5.9
Long-Term Average:
Bullish: 38.81%
Neutral: 30.92%
Bearish: 30.28%

Commentary

Bullish sentiment rose above 30% for just the 2nd time since April in the latest AAII Sentiment Survey. The rebound occurred as Cearish sentiment fell for a 2nd week running.

Neutral sentiment tied a 27-yr record for the most consecutive weeks of staying at or above 40%.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, rose 2.9 percentage points to 30.8%. The rebound puts optimism up into the lower level of its typical range. Bullish sentiment still remains below its historical average of 39.0% for a 19th straigh week.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 3.0 percentage points to 45.9%. The increase keeps Neutral sentiment above its historical average of 31.0% for the 28th straight week and at an unusually high level for a 15th week running.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, fell by 5.9 percentage points to 23.2%. This was the 2nd consecutive weekly decline of 5.9 percentage points. The historical average is 30.0%.

Pessimism declined by 11.8% since hitting a Y 2015 high of 35.1% on 1 July 2015. Over the same frame, Optimism rose by 8.2%. The moves have occurred as the S&P 500 has established a near-term bottom and subsequently rebounded.

Again  this is the 15th straight week with a Neutral sentiment reading above 40%. This ties a record set between 13 November 1987, and 4 March 1988, for consecutive weeks where Neutral sentiment is at or above 40%.

Unusually high readings of Neutral sentiment (currently above 39.6%) have been associated with better-than-average returns for the S&P 500.

Keeping some AAII members optimistic is the US Fed’s still-accommodative monetary policy, the ongoing Bull market, sustained economic expansion and earnings growth.

Causing some AAII members to be cautious are concerns about the possibility of a bigger decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger USD on earnings and geopolitical events.

This week’s special question asked AAII members whether, and why or why not, their short-term outlook for US stocks was affected by the recent drop in Chinese stocks.

74% of all respondents said the June/early July drops in the Shanghai and Shenzhen exchanges have not impacted their short-term expectations for how US stocks will perform. Reasons were mixed, though many said they do not invest in Chinese stocks, they view the Chinese markets as having a low correlation with the US markets or that Chinese stocks had a big upward run before the correction. Others simply said that they follow a long-term investment strategy.

About 18% of respondents said they are more cautious about US stocks following the price drop in Chinese stocks. Their concerns include a slowing of US economic growth caused by China and the potential for a negative, spillover effect on US stock markets.

By Charles Rotblut, CFA AAII

Paul Ebeling, Editor

HeffX-LTN

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