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Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.4 percentage points to 42.5% in the latest AAII Sentiment Survey. This was the fourth consecutive week that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially flat over the next six months, fell 3.8 percentage points to 25.9%. Neutral sentiment has stayed below its historical average of 31% during 12 out of the last 13 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 6.2 percentage points to 31.6%. This is the first time in three weeks that bearish sentiment has been above its historical average.

Though there has been an above average level of bullish sentiment for four consecutive weeks, it remains a cautious optimism. As is evidenced by the recent rebound in bearish sentiment, many individual investors continue to worry about the pace of the economic recovery and the uncertainty coming out of Washington. Yields are also an issue, and I continue to receive frequent calls about how to find dividend-yielding stocks.

This week's AAII Sentiment Survey Results:

  • Bullish: 42.5%, down 2.4 percentage points
  • Neutral: 25.9%, down 3.8 percentage points
  • Bearish: 31.6%, up 6.2 percentage points

Historical averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

The survey and its results are available online here.

Source: AAII Sentiment Survey: Bullish Sentiment at 42.5%, Stays Above Historical Average