AAII Sentiment Survey Results For Frame Ended 30 March 2016

AAII Sentiment Survey Results For Frame Ended 30 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: 27.2%, – 6.6 pts
Neutral: 47.1%, + 4.6 pts
Bearish: 25.8%, – 2.0 pts

Bullish: 39.0%
Neutral: 31.0%
Bearish: 30.0%

Commentary

The percentage of individual investors describing their 6-month outlook for stocks as “Neutral” is at its highest mark YTD, according to the latest AAII Sentiment Survey. The rise occurred as Optimism fell below 30% for the 1st time in 6 weeks and Pessimism rebounded.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, fell 6.6% to 27.2%. Optimism was last below 30% on 17 February (27.6%). The drop keeps Bullish sentiment below its historical average of 39.0% for the 21st week running, and the 54th out of the past 56 weeks.

Neutral sentiment

Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 4.6% to 47.1%. Neutral sentiment was last higher on 30 December 2015 (51.3%). This is the 9th straight week and the 61st out of the past 65 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, rose 2.0% to 25.8%. The increase ends a 6-week, 25% fall. Nonetheless, pessimism is below its historical average of 30.0% for a 5th consecutive week.

Optimism is back at an unusually low mark, more than 1 standard deviation below its historical average. At the same time, Neutral sentiment remains at an unusually high mark. Such readings have historically been followed by better-than-average gains in the S&P 500, though there is no guarantee that history will repeat itself.

In the past frame, there was some volatility in the major stock indexes, in addition to the headlines relating to the 22 March Islamic terrorist attack in Belgium. The presidential election is also weighing on individual investor sentiment, as the responses to this week’s special question show.

Giving individual investors cause for concern is the slow pace of US economic growth and uncertain global economic growth, terrorism and global unrest, lackluster corporate earnings and the prevailing level of valuations.

Some AAII members are encouraged by the sustained domestic economic growth, expected corporate earnings growth and low energy prices.

This week’s special question asked AAII members what factors are currently most influencing their 6-month outlook for stocks.

27% mentioned the presidential election, the domestic economy was 2nd, listed both positively and negatively by 21% of respondents.

13% pointed to global economic weakness and uncertainty, particularly in China and Europe.

About 17% cited the US Fed, and potential interest rate hikes.

A bit over 15% said that Crude Oil and commodity prices are influencing their outlook for stock prices.

Terrorism and global unrest tied with earnings, with each named by about 14% of respondents.

Less than 6% of AAII members mentioned prevailing valuations.

The majority of AAII respondents listed more than 1 Key factor influencing their outlook.

By Charles Rotblut, CFA, AAII Journal

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