AAII Sentiment Survey: Neutral Sentiment Nears a 12-Year High

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Neutral sentiment is near a 12-year high, according to the latest AAII Sentiment Survey. Bullish sentiment fell below 40 percent for the first time since November 21, 2013. Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.6 percentage points to 39.0 percent. This is the first time in eight weeks and just the third time in the past 15 weeks that bullish sentiment is below 40 percent. The historical average is 39.0 percent.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, spiked 8.1 percentage points higher to 39.5 percent. This is highest neutral sentiment has been since May 2, 2002 (39.6 percent). It is also the first time neutral sentiment is higher than bullish sentiment since November 21, 2013. The historical average is 30.5 percent. Bearish sentiment, expectations that stock prices will fall over the next six months, declined 3.5 percentage points to 21.5 percent. This is the 14th consecutive week and the 16th out of the past 18 weeks with pessimism below its historical average of 30.5 percent.

At current levels, neutral sentiment is right at the lower limit of what we would consider to be an unusually high reading (more than one standard deviation above average.) Bearish sentiment is close to, but not below, the upper limit of what we would consider to be an unusually low reading.

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