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Optimism among individual investors about the short-term direction of the stock market fell to a six-week low in the latest AAII Sentiment Survey. Neutral sentiment jumped for the second straight week, and pessimism stayed around the same level.
Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.4 percentage points to 24.5%. Optimism was last lower on October 20, 2022 (22.6%). Bullish sentiment remains below its historical average of 37.5% for the 48th consecutive week.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased by 4.2 percentage points to 35.1%. The jump puts neutral sentiment above its historical average of 31.5% for just the second time since the end of July.
Bearish sentiment, expectations that stock prices will fall over the next six months, rose by 0.2 percentage points to 40.4%. Pessimism is above its historical average of 31.0% for the 51st time out of the past 54 weeks.
The bull-bear spread (bullish minus bearish sentiment) is -16.0%.
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.
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. It should be noted that most of this week’s results were tabulated before yesterday’s comments about monetary policy were made by Federal Reserve chairman Jerome Powell.
This week’s AAII Sentiment Survey results:
- Bullish: 24.5%, down 4.4 percentage points
- Neutral: 35.1%, up 4.2 percentage points
- Bearish: 40.4%, up 0.2 percentage points
Historical averages:
- Bullish: 37.5%
- Neutral: 31.5%
- Bearish: 31.0%
The AAII Sentiment Survey has been conducted weekly since July 1987.
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