AAII Sentiment Survey: Neutral sentiment falls to 18-month low

The results from the latest AAII Sentiment Survey show the percentage of individual investors describing their outlook as “neutral” falling to its lowest level in 18 months. In addition, optimism rebounded while bearish sentiment pulled back.

·Bullish sentiment - expectations that stock prices will rise over the next six months

- Jumped by 10.4 percentage points to 26.9%.

- Optimism from staying below its historical average of 38.0% for the 24th consecutive week. Bullish sentiment also remains at an unusually low level for the 14th time out of the last 17 weeks.

·Neutral sentiment - expectations that stock prices will stay essentially unchanged over the next six months

- Fell by 3.9 percentage points to 20.3%.

- Neutral sentiment was last lower on November 11, 2020 (19.3%). The historical average is 31.5%.

·Bearish sentiment - expectations that stock prices will fall over the next six months

- Fell 6.5 percentage points to 52.9%.

- This is the 23rd time out of the last 24 weeks that pessimism is above its historical average of 30.5%

- It is also the 13th time out of the last 16 weeks that bearish sentiment is at an unusually high level.

- Slightly more than half of respondents (54%) feel that other investors are too bearish. Many of these respondents believe that some of the market’s uncertainty is already reflected in prices.

- 19% of respondents say that other investors are too bullish. Many warn of an impending recession attributed to inflation and the Russia-Ukraine conflict.

- Around 18% of respondents express a neutral or moderate outlook and/or feel that other investors are gauging the market correctly in terms of bullishness or bearishness.

- Measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market short term.

- Individuals are polled from the AAII Web site on a weekly basis.