AAII Sentiment Survey August 7: Pessimism Spikes

Bearish sentiment rises to 43.2% in the latest AAII Sentiment Survey, as optimism and neutral outlooks decline.

Pessimism among individual investors about the short-term outlook for stocks increased in the latest AAII Sentiment Survey. Meanwhile, optimism and neutral sentiment decreased.

Bullish sentiment, expectations that stock prices will rise over the next six months, decreased 5.5 percentage points to 34.9%. Bullish sentiment is below its historical average of 37.5% for the second time in six weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, decreased 4.8 percentage points to 21.9%. Neutral sentiment is below its historical average of 31.5% for the 55th time in 57 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased 10.2 percentage points to 43.2%. Bearish sentiment is unusually high and is above its historical average of 31.0% for the 36th time in 38 weeks.

The bull-bear spread (bullish minus bearish sentiment) decreased 15.7 percentage points to –8.4%. The bull-bear spread is below its historical average of 6.5% for the 25th time in 27 weeks.

This week’s special question asked AAII members what they think about the Federal Reserve’s decision to keep interest rates unchanged.

Here is how they responded:

• They should have raised rates: 1.0%

• It was the right move: 66.5%

• They should have cut rates: 29.6%

• Not sure/no opinion: 2.6%

This week’s Sentiment Survey results:

Bullish: 34.9%, down 5.5 points
Neutral: 21.9%, down 4.8 points
Bearish: 43.2%, up 10.2 points

Historical averages:

Bullish: 37.5%
Neutral: 31.5%
Bearish: 31.0%