Bullish Investor Sentiment Touches Three-Week Low
Neutral sentiment jumped to its highest level in a month, according to the according to the latest AAII Sentiment Survey, as large-cap stock prices fell for five consecutive days. Bullish sentiment, expectations that stock prices will rise over the next six months, plunged by 9.1 percentage points to 36.1 percent. This is a three-week low. It is also the sixth time in the past nine weeks optimism is below its historical average of 39.0 percent.
Neutral sentiment, expectations that stock prices will stay essentially unchanged, rebounded by 8.1 percentage points to 33.3 percent. This is ends a four-week skid and puts neutral sentiment back above its historical average of 30.5 percent.
Bearish sentiment, expectations that stock prices will fall over the next six months, edged 0.9 percentage points upward to 30.6 percent. The historical average is 30.5 percent. At current levels, all three sentiment indicators are well within their typical historical ranges. The drop in bullish sentiment and the increase in neutral sentiment occurred as both the Dow Jones industrial average and the S&P 500 fell during all five trading days of the survey’s period.
The fiscal standoff in Congress likely didn’t help optimism either, though it did not necessarily cause individual investors to be bearish. Rather, the market’s rally this year, corporate earnings and economic growth are playing bigger roles in influencing sentiment. This said, several AAII members have previously expressed their frustration with Washington politics.