The latest AAII Sentiment Survey shows the largest weekly changes in individual investor optimism and pessimism in five months. Neutral sentiment had a more modest change but still declined for the third consecutive week.
Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 13.3 percentage points to 29.8%. Optimism was last lower on December 19, 2018 (24.9%). The historical average is 38.5%.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, continued to drop. This week’s 2.8-percentage-point decline put neutral sentiment at 30.9%, its lowest level since January 23, 2019 (30.0%). The drop also ends a streak of 15 consecutive weeks with readings above the historical average of 31.0%.
Bearish sentiment, expectations that stock prices will fall over the next six months, spiked by 16.1 percentage points to 39.3%. Pessimism was last higher on January 2, 2019 (42.8%). Bearish sentiment is above its historical average of 30.5% for the first time in nine weeks.
This week’s changes were the largest since December 12, 2018. Six months ago, bullish sentiment fell by 17.0 percentage points while bearish sentiment jumped by 18.4 percentage points.
At current levels, bullish sentiment is near the bottom of its typical range while bearish sentiment is near the top of its typical range. Neither is at an unusually low or high level, respectively.
Many individual investors have been monitoring trade negotiations, particularly between the U.S. and China. We’ve also heard from AAII members who are concerned about a drop in stock prices occurring, though we’ve also heard from others who have been encouraged by this year’s upward run in stock prices. Also having an influence are monetary policy, Washington politics (including President Trump), geopolitics, valuations, corporate earnings and the pace of economic growth.
This week’s special question asked AAII members what industries or sectors they like right now. Approximately 19% say health care with an additional 5% of respondents specifying pharmaceutical companies. About 19% say technology. Tied for third are financials/banks and utilities with slightly more than 12% of all respondents listing each. Just under 8% of respondents say real estate and real estate investment trusts (REITs), while another 7% say consumer staples. Several respondents list more than one industry or sector.
This week’s AAII Sentiment Survey results:
- Bullish: 29.8%, down 13.3 percentage points
- Neutral: 30.9%, down 2.8 percentage points
- Bearish: 39.3%, up 16.1 percentage points
- Bullish: 38.5%
- Neutral: 31.0%
- Bearish: 30.5%
The AAII Sentiment Survey has been conducted weekly since July 1987. The survey and its results are available online.
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