AAII Sentiment Survey Results For Frame Ended 16 September 2015

Bearish: 29.1%, – 5.9

Commentary

Pessimism fell to an 8 wk low, ending a streak of 7 weeks running with above-average readings, in the latest AAII Sentiment Survey. Neutral sentiment rebounded, while optimism declined some.

Bullish sentiment:

Expectations that stock prices will rise over the next 6 months, pulled back by 1.4 percentage points to 33.3%. The decline keeps Bullish sentiment below its historical average of 39.0% for the 28th straigh week, the longest such streak since a 29-wk stretch in Y 1993.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose7.3 percentage points to 37.6%. The rebound puts Neutral sentiment back above its historical average of 31.0%.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, fell 5.9 percentage points to 29.1%. This is the lowest level of pessimism registered by our survey since 23 July 2015 at 25.6%. The historical average is 30.0%.

Rising stock prices over the survey period combined with a decrease in market volatility helped to lessen some of the pessimism registered in the survey. This said, it is too early to say whether this week’s results imply a shift in attitudes or just a 1-week change.

Though some individual particpants were encouraged by the decline in valuations that occurred in late August, others are still concerned about the possibility of stock prices falling further due to valuations, slow earnings growth and slow economic growth.

Note: Bullish, Neutral and Bearish sentiment all remain within their typical historical ranges.

This week’s special question asked AAII members what industries or sectors they like right now. Nearly 40% of all respondents said healthcare, with many specifically listing biotechnology. Energy was picked by about 20% of respondents, followed by technology (17%), financials (15%) and consumer staples (16%). Many respondents listed more than 1 industry or sector.