AAII Sentiment Survey: Bullish Sentiment Hits a 6-Month High

 

Source: Thinkstock

Source: Thinkstock

Special Note: The June AAII Journal features a new historical analysis of the AAII Sentiment Survey. The analysis found a link between above-average six- and 12-month gains in the S&P 500 following unusually high neutral sentiment readings of and unusually low bullish sentiment readings.

Optimism about the short-term direction of the stock market exceeded 44 percent for the first time since last December, according to the latest AAII Sentiment Survey. Both neutral sentiment and bearish sentiment continued to fall.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 5.2 percentage points to 44.7 percent. This is the highest level of optimism recorded by our survey since December 26, 2013 (55.1 percent).

The historical average is 39.0 percent. Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.2 percentage points to 34.1 percent. Though at a three-month low, neutral sentiment remains above its historical average of 30.5 percent for the twenty-third consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.0 percentage points to 21.3 percent. The drop puts pessimism below its historical average of 30.5 percent for the eighth straight week.

The spread between bullish and bearish sentiment (the “bull-bear spread“) widened to 23.4 percentage points. This is the largest bull-bear spread since December 26, 2013 (36.5 percentage points).