AAII Sentiment Survey Results For Frame Ended 23 March 2016
$DIA, $SPY, $QQQ, $VXX
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 sentiment voting frame
Data represents what direction members feel the stock market will be in the next 6 months
Sentiment Survey says:
Bullish: 33.8%, +3.8
Neutral: 42.5%, – 0.7
Bearish: 23.7%, – 3.1
Change from last week:
Bullish: +3.8
Neutral: -0.7
Bearish: -3.1
Long-Term Average:
Bullish: 38.6%
Neutral: 31.1%
Bearish: 30.3%
Commentary
The level of short-term pessimism among individual investors continues to pull back, according to the latest AAII Sentiment Survey.
Bearish sentiment is now down by a cumulative 25 percentage points since early February. However, optimism remains below average and Neutral sentiment is at an unusually high level.
Bullish sentiment
Expectations that stock prices will rise over the next 6 months, rebounded by 3.8 percentage points to 33.8%. The increase was not large enough to prevent optimism from staying below its historical average of 39.0% for the 20th week running and the 53rd out of the past 55 weeks.
Neutral sentiment
Expectations that stock prices will stay essentially unchanged over the next 6 months, declined 0.7 percentage points to 42.5%. This is the 8th straightweek and the 60th in the past 64 weeks with a Neutral sentiment reading above its historical average of 31.0%.
Bearish sentiment
Expectations that stock prices will fall over the next 6 months, declined 3.1 percentage points to 23.7%. The drop put pessimism at a new low for Y 2016, and just barely above the 31 December 2015 reading of 23.6%. Bearish sentiment has now been below its historical average of 30.0% for 4 consecutive weeks.
Though pessimism has declined considerably over the past 9 weeks, it still remains within its typical historical range.
More importantly, optimism continues to stay at below-average levels, with only one in 3 survey respondents currently describing their short-term outlook as “Bullish.”
Though some individual investors are encouraged by the market’s rebound off of its 10 February lows, sustained economic growth and still comparatively low energy prices, others complained about the possibility of further declines in stock prices, the pace of economic growth in the US, the pace of economic growth in China, tensions in the Middle East, the rate of earnings growth and prevailing valuations. Frustration with Washington, DC’s politics also continues to be expressed.
This week’s special question asked AAII members for their opinion about the recent Bull run in stocks that began in mid-February.
There was no consensus.
The largest group of respondents (22%) said that the rebound will not last.
Several respondents in this group described the rebound as a temporary occurrence or a Bear market rally.
Slightly more than 14% of respondents said that the rally was a reaction to Oversold conditions, excessive pessimism and short-term trading.
Nearly 9% said that stock prices are tied to swings in commodity prices, especially Crude Oil.
About 7% expect the stock market to remain volatile.
Almost 5% of respondents expect stocks to rise more, while 4% attributed recent buying activity to the US Fed monetary policy, and low interest rates, and 4% described the rebound as being normal or otherwise expected.
By Charles Rotblut, CFA, AAII Journal
Paul Ebeling, Editor
HeffX-LTN
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