AAII Sentiment Survey: Optimism Rebounds to Two-Month High​

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Optimism among individual investors hit a two-month high in the latest AAII Sentiment Survey. Neutral sentiment, meanwhile, stayed above 40 percent for a fifth consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 6.0 percentage points to 36.5 percent. This is the highest level of optimism registered by our survey since March 20, 2014 (36.8 percent). The improvement was not big enough to keep bullish sentiment below its historical average of 39.0 percent for the eleventh consecutive week, however.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.8 percentage points to 40.3 percent. Even with the drop, neutral sentiment remains above its historical average of 30.5 percent for the twenty-first consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.2 percentage points to 23.2 percent. The drop keeps pessimism below its historical average of 30.5 percent for the sixth straight week. The spread between bullish and bearish sentiment (the “bull-bear spread”) is now at 13.3 percentage points, the widest it has been since March 13, 2014.

The ongoing streak of +40 percent neutral sentiment readings is unusual. The last time neutral sentiment stayed above 40 percent for five consecutive weeks or longer was the six-week period of July 2, 1993, through August 20, 1993. Throughout the entire history of the survey, there appear to have only been six occasions — five occurring before 1990 — when neutral sentiment stayed above 40 percent on consecutive weeks for longer periods.