AAII Sentiment Survey Results For Frame Ended 19 August 2015
$SPY, $QQQ, $DIA
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 Sentiment Survey Update
This week’s results, as follows:
Neutral: +6.4
Bearish: -2.8
Neutral: 30.94%
Bearish: 30.29%
Commentary
Neutral sentiment’s rise in this week’s AAII Sentiment Survey kept it above its historical average for a record 33rd week running. The prior record of 32 consecutive weeks was set last year. This week’s rise in Neutral sentiment occurred as both optimism and pessimism declined.
Bullish Sentiment
Expectations that stock prices will rise over the next 6 months, pulled back by 3.6 percentage points to 26.8%. The drop keeps optimism below its historical average of 39.0% for the 24th straight 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, rebounded by 6.4 percentage points to 39.8%. The rise keeps Neutral sentiment above its historical average of 31.0% for a record 33rd straight week, as noted above. The prior record streak of 32 weeks running was set between January and August of Y 2014.
Bearish Sentiment
Expectations that stock prices will fall over the next 6 months, fell 2.8 percentage points to 33.3%. Even with that decline, pessimism is above its historical average of 30.0% for a 4th straight week. The last time Bearish sentiment was last above its historical average on 4 consecutive weeks was between 11 April and 2 May 2013.
Bullish sentiment is back at an unusually low mark. Such readings have historically been correlated with above-median returns for the S&P 500.
Neutral sentiment is right at the top end of its typical historical range.
The record streak of above-average readings for Neutral sentiment has occurred as the S&P 500 has been essentially flat for several months. The S&P 500 fluctuated within a 4.44% range during the 6-month period ended 13 August 2015. This as the narrowest trading range on record.
Giving AAII members reasons for caution are concerns about the possibility of a sizable decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger dollar on earnings and geopolitical events.
The lack of market breadth and ongoing daily volatility on are also playing a role.
Keeping other AAII members optimistic is the Fed’s still-accommodative monetary policy, the ongoing Bull Market, sustained economic expansion and earnings growth.
This week’s special question asked AAII members what one thing about the current market environment they would change if they had a magic wand. We received a wide variety of answers, but were able to group the responses into broad categories.
The largest group of respondents (21%) singled out the Fed, with many calling for either an increase in interest rates or clarity on the timing of the first rate hike.
Equal numbers, about 13% per group, want a change in government policies or a change in market conditions.
Those wanting a change in policies discussed the tax code, regulations, both for and against, and reducing the federal debt.
Lower volatility was the most desired change in market conditions, though some members want prices to fall in order to reduce prevailing valuations.
An additional 8% would like to see less short-term trading and thinking.
China was cited by 9% of respondents, with individual investors wanting stronger economic growth or a more freely traded RMB Yuan.
By Charles Rotblut, CFA AAII
Paul Ebeling, Editor
HeffX-LTN
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