AAII Sentiment Survey: Bullish and bearish sentiment both rise

The percentage of individual investors describing their outlook for stocks as “bullish” rose, as did the percentage of those describing their outlooks as “bearish” in the latest AAII Sentiment Survey.

- Expectations that stock prices will rise over the next six months, increased by 1.6 percentage points to 26.0%.

- Even with this week’s rise, optimism is below its historical average of 38.0% for the 26th consecutive week.

- Bullish sentiment is unusually low for the 16th time out of the last 18 weeks.

- Expectations that stock prices will stay essentially unchanged over the next six months, decreased by 3.0 percentage points to 23.6%.

- Neutral sentiment levels are below the historical average of 31.5% for the fourth consecutive week.

- Expectations that stock prices will fall over the next six months, increased by 1.4 percentage points to 50.4%.

- This is the 25th time out of the past 26 weeks that pessimism is above its historical average of 30.5%.

- It is the 15th time out of the last 18 weeks that bearish sentiment is unusually high.

- As noted above, bullish sentiment remains unusually low while bearish sentiment continues to be unusually high. The bull-bear spread (bullish minus bearish sentiment) is also unusually low.

- Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually low readings for bullish sentiment and for the bull-bear spread. Unusually high bearish sentiment readings historically have also been followed by above-average and above-median six-month returns in the S&P 500.

- 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.