AAII Sentiment Survey: Optimism Hits a 12-Week High, Exceeds Neutral Sentiment

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Source: Thinkstock

Source: Thinkstock

Optimism among individual investors is above its historical average for the first time in twelve weeks. At the same time, neutral sentiment fell below 40 percent for the time in six weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.0 percentage points to 39.5 percent. This is the first time optimism is above its historical average of 39.0 percent since March 13, 2014.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.1 percentage points to 38.3 percent. This is the first sub-40 percent reading since April 24, 2014. Nonetheless, neutral sentiment remains above its historical average of 30.5 percent for the twenty-second consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.0 percentage points to 22.2 percent. The drop puts pessimism below its historical average of 30.5 percent for the seventh straight week.

The spread between bullish and bearish sentiment (the “bull-bear spread”) widened to 17.3 percentage points. This is the largest bull-bear spread since February 27, 2014.

This week is the first time bullish sentiment has exceeded neutral sentiment in three months (since March 13, 2014). During the past three weeks, optimism has rebounded by a cumulative 9.1 percentage points, while neutral sentiment has declined by a cumulative 4.9 percentage points. Neutral sentiment is now back within the typical range of its historical readings (less than one standard deviation from the mean), though near the upper end of the typical range.

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