AAII Sentiment Survey: Bearish Sentiment Jumps To Nine-Week High

Pessimism among individual investors about the short-term direction of the stock market rose to a nine-week high in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.0 percentage points to 20.3%. This week’s reading is the 52nd lowest recorded since the survey started in 1987. Bullish sentiment remains below its historical average of 37.5% for the 51st consecutive week. It is at an unusually low level for the fourth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased by 3.7 percentage points to 27.4%. The decline keeps neutral sentiment below its historical average of 31.5% for the second consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 7.7 percentage points to 52.3%. Pessimism is at its highest level since October 20, 2022 (56.2%). Bearish sentiment is also above its historical average of 31.0% for the 54th time out of the past 57 weeks and is at an unusually high level for the third consecutive week.

The bull-bear spread (bullish minus bearish sentiment) is –32.0%. This is well below the historical average of 6.7% and is 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 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.

Concerns about the economy, inflation, corporate earnings and volatility in the stock market continue to cause many individual investors to maintain a cautious short-term outlook.

This week’s AAII Sentiment Survey results:

• Bullish: 20.3%, down 4.0 percentage points
• Neutral: 27.4%, down 3.7 percentage points
• Bearish: 52.3%, up 7.7 percentage points

Historical averages:

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

The AAII Sentiment Survey has been conducted weekly since July 1987. The survey and its results are available online.