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Optimism among individual investors about the short-term direction of the stock market jumped to its highest level in more than a year according to the latest AAII Sentiment Survey. Neutral sentiment also rose, while pessimism fell.
Bullish sentiment, expectations that stock prices will rise over the next six months, rose 7.6 percentage points to 37.5%. This is the highest level of optimism registered by the survey since December 30, 2021 (37.7%). It is also the first time in 58 weeks that bullish sentiment is at or above its historical average of 37.5%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.0 percentage points to 37.5%. Neutral sentiment is above its historical average of 31.5% for the sixth consecutive week. At six weeks, this is the longest streak of above-average neutral sentiment since a seven-week stretch in December 2021 and January 2022.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell 9.6 percentage points to 25.0%. This is the lowest level of pessimism registered by the survey since November 11, 2021 (24.0%). Bearish sentiment is below its historical average of 31.0% for just the fourth time out of the past 64 weeks.
The bull-bear spread (bullish minus bearish sentiment) is 12.5%. This is the first positive reading in 45 weeks and the first above-average reading in 58 weeks.
This year’s rebound in stock prices along with less aggressive monetary policy are likely contributing to the improved level of optimism. Nonetheless, concerns about the economy, inflation and corporate earnings remain.
This week’s AAII Sentiment Survey results:
- Bullish: 37.5%, up 7.6 percentage points
- Neutral: 37.5%, up 2.0 percentage points
- Bearish: 25.0, down 9.6 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.
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