AAII Sentiment Survey Results For Frame Ended 17 June 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
Bullish: 25.4%, up 5.4
Neutral: 40.3%, down 7.1
Bearish: 34.3% up 1.7
Change from last week
Bullish: +5.4
Neutral: -7.1
Bearish: +1.7
Long-Term Average:
Bullish: 38.83%
Neutral: 30.88%
Bearish: 30.29%
The Sentiment Survey
Optimism rebounded and pessimism rose to a 10-month high in the latest AAII Sentiment Survey. The changes came as Neutral sentiment fell to its lowest level since early April.
Bullish sentiment
Expectations that stock prices will rise over the next 6 months, jumped 5.4 percentage points to 25.4%. The rebound follows what had been the lowest level of optimism since 11 April 2013. Even with the increase, bullish sentiment is below its historical average of 30% for a 7th week running. The last time optimism experienced a similar consecutive week stretch of below-average readings was 16 January through 27 February 2003.
Neutral sentiment
Expectations that stock prices will stay essentially unchanged over the next 6 months, fell 7.1 percentage points to 40.3%. This is the lowest reading since 2 April 2015 (32.6%). It also ends a record streak of 10 straight weeks with Neutral sentiment at or above 45%. Nonetheless, neutral sentiment is above its historical average of 31.0% for the 24th straight week.
Bearish sentiment
Expectations that stock prices will fall over the next 6 months, rose 1.7 percentage points to 34.3%. Pessimism was last higher on 7 August 2014 (38.2%). This week’s increase keeps Bearish sentiment above its historical average of 30.0% for just the 6th time this year.
Though individual investors’ short-term outlook became more polarized this week, Neutral sentiment remains at an unusually high level, even with this week’s drop. There is not a reason to explain the higher level of polarization this week, particularly since the FOMC’s statement was released near the end of this week’s survey frame, though the shift does follow what had been a very low reading for bullish sentiment. The level of optimism registered last week was among the 40 lowest in the survey’s history.
Even with this week’s changes, optimism remains at an unusually low level and neutral sentiment, as noted above, remains at an unusually high level. Both such occurrences have typically been followed by better-than-average 6 and 12-month returns for the S&P 500.
Bullish sentiment readings below 28.6% are unusually low, and unusually low levels of optimism have typically been followed by better-than-average 6-month and 12-month returns for the S&P 500. Similarly, the S&P 500 has realized better-than-average returns when neutral sentiment is at an unusually high level, as it currently remains.
Causing some AAII members to be cautious or pessimistic are prevailing valuations, recent price volatility, geopolitical events, the pace of economic growth, the impact of the stronger USD on earnings growth and worries that a notable decline in stock prices could occur. Keeping other AAII members encouraged are the ongoing Bull market, sustained economic expansion, earnings growth and still-accommodative monetary policy.
By Charles Rotblut, CFA AAII
Paul Ebeling, Editor
HeffX-LTN
Paul Ebeling
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