AAII Sentiment Survey: Bullish Sentiment Jumps To A 2-Month High

 |  Includes: DIA, IVV, SPY, VOO, VTI
by: AAII

Optimism jumped to a two-month high in the latest AAII Sentiment Survey. The rise occurred as both neutral and bearish sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, spiked upwards by 10.0 percentage points to 45.5%. This is the highest level of optimism since July 11, 2013. It is also the first time in five weeks and just the second time in the past seven weeks that bullish sentiment is above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, declined 3.3 percentage points to 29.9%. This is the second time in four weeks that neutral sentiment is below its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 6.7 percentage points to 24.6%. The level of pessimism was last lower on July 25, 2013. The historical average is 30.5%.

Since hitting a three-month low of 29.0% on August 22, bullish sentiment has rebounded by a cumulative 16.5 percentage points. This upward move is not surprising, given the swings in sentiment that have occurred over the past several months. Even with the increase, bullish sentiment remains within its typical range of readings.

This year's fourth seven-day streak of gains in the S&P 500 coincided with our survey period of Thursday through Wednesday. The market's resilience and its rebound from its August lows have encouraged individual investors. Nonetheless, macro uncertainty including the Federal Reserve, Washington politics, market valuations and the evolving situation in Syria continue to keep AAII members' sanguinity for stocks in check.

This week's special question asked AAII members what economic trends they are currently watching. Interest rates topped the list, with 24% of respondents saying they monitor them. An additional 13% said they are watching Federal Reserve policy. The employment picture came in second, listed by 19% of respondents. Housing and real estate was a close third, named by 18% of respondents. Nearly 7% of respondents said they are monitoring the situation in Syria, even though we did not ask about geopolitics.

This week's AAII Sentiment Survey:

  • Bullish: 45.5%, up 10.0 percentage points
  • Neutral: 29.9%, down 3.3 percentage points
  • Bearish: 24.6%, down 6.7 percentage points

Historical averages:

  • Bullish: 39.0%
  • Neutral: 30.5%
  • Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.