AAII Sentiment Survey Results For Frame Ended 5 August 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.
AAII Investor Sentiment Survey Update
This week’s results, as follows:
Bullish: 24.3%, +3.2
Neutral: 44.0%, +5.8
Bearish: 31.7%, – 9.0
Change from last week:
Bullish: +3.2
Neutral: +5.8
Bearish: -9.0
Long-Term Average:
Bullish: 38.78%
Neutral: 30.94%
Bearish: 30.28%
Commentary
The proportion of individual investors describing their short-term market expectations as neutral rebounded back above 40% in the latest AAII Sentiment Survey. The change occurred as pessimism pulled back after nearly hitting a 2-year high last week.
Bullish sentiment
Expectations that stock prices will rise over the next 6 months, rose 3.2% percentage points to 24.3%. The increase follows what had been a 7-week low. It is not large enough to prevent optimism from being below its historical average of 39.0% for a 22nd week running, the longest streak since a 29-week stretch in Y 1993.
Neutral sentiment
Expectations that stock prices will stay essentially unchanged over the next 6 months, jumped 5.8 percentage points to 44.0%. The increase keeps Neutral sentiment above its historical average of 31.0% for a 31st straight week.
Bearish sentiment
Expectations that stock prices will fall over the next 6 months, pulled back by 9.0 percentage points to 31.7%. The drop follows last week’s large upward spike. Even with the decrease, pessimism is above its historical average of 30.0% for a 2nd consecutive week and the 5th time in the past 9 weeks.
Bullish sentiment is at an unusually low level (below 28.5%) for the 4th time in 6 weeks. Neutral sentiment is back at an unusually high level (above 39.6%) for the 17th time in 18 weeks. Both unusually low optimism and unusually high Neutral sentiment have been correlated with above-median returns for the S&P 500.
Though there have been notable swings in Bullish and Bearish sentiment over the past 2 months, pessimism has generally been higher relative to the levels registered over the preceding 12 months. A bigger constant has been Neutral sentiment, which is now just shy of matching the record for the most consecutive weeks of above-average readings (32 weeks).
Giving AAII members reasons for caution are concerns about the possibility of a sizeable decline in stock prices occurring, the pace of economic growth, the lack of wage growth, valuations, the impact of the stronger USD on earnings and geopolitical events. As this week’s special question indicates, the lack of market breadth is a factor for some individual investors as well. Keeping other AAII members optimistic is the US Fed still-accommodative monetary policy, the ongoing Bull market, sustained economic expansion and earnings growth.
This week’s special question asked AAII members about how concerned they are about a small number of stocks driving this year’s gains in the S&P 500 and the NAS 100. Nearly 44% of respondents said they are either concerned or very concerned about the lack of market breadth.
Several viewed it as a negative signal about the market’s future direction. Slightly more than 15% said they were somewhat concerned about the lack of market breadth. 32% said they are not concerned or are only slightly concerned.
Several of these members said they are either more focused on the performance of their portfolios or that they follow a long-term approach.
By Charles Rotblut, CFA AAII
Paul Ebeling, Editor
HeffX-LTN
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