AAII Sentiment Survey: Bearish sentiment is unusually high

The results from the latest AAII Sentiment Survey show neutral sentiment rebounding from last week’s 18-month low. In addition, optimism continues to be unusually low and pessimism continues to be unusually high.

Bullish sentiment
- Expectations that stock prices will rise over the next six months, decreased by 2.5 percentage points to 24.3%.
- The decline keeps optimism below its historical average of 38.0% for the 25th consecutive week.
- Bullish sentiment also remains at an unusually low level for the 15th time out of the last 18 weeks.

Neutral sentiment
- Expectations that stock prices will stay essentially unchanged over the next six months, increased by 6.4 percentage points to 26.6%.
- The rise puts neutral sentiment back within its typical historical range but was not enough to put it above the historical average of 31.5%.

Bearish sentiment
- Expectations that stock prices will fall over the next six months, decreased by 3.8 percentage points to 49.0%.
- This is the 24th time out of the last 25 weeks that pessimism is above its historical average of 30.5%.
- It is also the 14th time out of the last 17 weeks that bearish sentiment is at an unusually high level.

- At current levels, bullish sentiment and the bull-bear spread (bullish minus bearish sentiment) are all unusually low. Meanwhile, bearish sentiment is unusually high.
- Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually low readings for bullish sentiment and for the bull-bear spread. Unusually high bearish sentiment readings historically have also been followed by above-average and above-median six-month returns in the S&P 500.

- Measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market short term.
- Individuals are polled from the AAII Web site on a weekly basis.