AAII Sentiment Survey: A New 2022 High For Bullish Sentiment

Optimism among individual investors about the short-term direction of the stock market jumped to a new 2022 high in the latest AAII Sentiment Survey. Pessimism pulled back following last week’s big jump, and neutral sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.4 percentage points to 33.5%. Optimism was last higher on December 30, 2021 (37.7%). Even with the big increase, bullish sentiment remains below its historical average of 37.5% for the 46th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by 1.5 percentage points to 26.3%. The pullback keeps neutral sentiment below its historical average of 31.5% for the 27th time in 30 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell by 6.8 percentage points to 40.2%. Pessimism is above its historical average of 31.0% for the 49th time out of the past 52 weeks.

The bull-bear spread (bullish minus bearish sentiment) is –6.8%.

All three sentiment indicators and the bull-bear spread are within their typical historical ranges. The historical average for bullish sentiment has been lowered to 37.5%, while the historical average for bearish sentiment has been raised to 31.0%.

The rebound in stock prices, including Thursday’s big jump, has caused some individual investors to be more upbeat about the short-term prospects for stocks. Nonetheless, this year’s volatility in the major stock indexes along with inflation, corporate earnings and increased chatter about the possibility of a recession continue to cause many investors to have a cautious outlook.

This week’s AAII Sentiment Survey results:

• Bullish: 33.5%, up 8.4 percentage points
• Neutral: 26.3%, down 1.5 percentage points
• Bearish: 40.2%, down 6.8 percentage points

Historical averages:

• Bullish: 37.5%
• Neutral: 31.5%
• Bearish: 31.0%

The AAII Sentiment Survey has been conducted weekly since July 1987.