AAII Sentiment Survey: Investors Remain Pessimistic Despite Dow Record Highs

Though aggregate pessimism increased as the Dow Jones industrial average reached new record highs, some individual investors described themselves as being more optimistic in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 2.7 percentage points to 31.1%. The improvement ended a six-week drop that saw optimism decline by a cumulative 23.9 percentage points. Even with the rebound, bullish sentiment is below its historical average of 39% for the second consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.6 percentage points to 30.4%. This puts neutral sentiment nearly even with its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.9 percentage points to 38.5%. During this span of three consecutive weekly increases, pessimism has risen by a cumulative 9.8 percentage points. The historical average is 30.5%.

The Dow’s new record high gave some AAII members reason to believe the current rally will continue. It also heightened concerns other AAII members have about the markets being overbought and due for a pullback in prices. In the background are mixed views about the pace of economic growth along with ongoing frustration with Washington.

This week’s special question asked AAII members how they perceived the health of the U.S. consumer. There was no consensus. The largest group (about 30% of respondents) described consumers as struggling….