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Optimism and pessimism among individual investors about the short-term direction of the stock market fell, while neutral sentiment jumped to a 40-week high.
Bullish sentiment, expectations that stock prices will rise over the next six months, fell 6.0 percentage points to 20.5%. Optimism remains below its historical average of 37.5% for the 53rd consecutive week. This is the second time in three weeks with a bullish sentiment reading ranking among the 60 lowest ever recorded since the survey started in 1987.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped by 11.6 percentage points to 37.5%. Neutral sentiment was last higher on March 31, 2022 (40.6%). The historical average is 31.5%.
Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.6 percentage points to 42.0%. Bearish sentiment is above its historical average of 31.0% for the 56th time out of the past 59 weeks and is at an unusually high level for the fifth consecutive week.
The bull-bear spread (bullish minus bearish sentiment) is –21.5%. This is well below the historical average of 6.6%. The bull-bear spread remains unusually low for the sixth consecutive week.
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: 20.5%, down 6.0 percentage points
- Neutral: 37.5%, up 11.6 percentage points
- Bearish: 42.0%, down 5.6 percentage points
Historical averages:
- Bullish: 37.5%
- Neutral: 31.5%
- Bearish: 31.0%
The AAII Sentiment Survey has been conducted weekly since July 1987.
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