Pessimism among individual investors about the short-term outlook for stocks decreased in the latest AAII Sentiment Survey. Meanwhile, optimism and neutral sentiment increased.
Bullish sentiment, expectations that stock prices will rise over the next six months, increased 5.6 percentage points to 40.3%. Bullish sentiment is above its historical average of 37.5% for the third time in six weeks.
Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 1.9 percentage points to 20.8%. Neutral sentiment is unusually low and is below its historical average of 31.0% for the 31st consecutive week.
Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 7.5 percentage points to 39.0%. Bearish sentiment is above its historical average of 31.5% for the 35th consecutive week.
The bull-bear spread (bullish minus bearish sentiment) increased 13.1 percentage points to 1.3%. The bull-bear spread is below its historical average of 6.5% for the 12th consecutive week.
This week’s special question asked AAII members where they are allocating new cash (e.g., from distributions, dividends or sales).
Here is how they responded:
Stock ETFs or mutual funds: 26.4%
Individual stocks: 25.7%
Cash equivalents [money market funds, certificates of deposit (CDs), Treasury bills]: 24.3%
Bonds or bond funds: 14.9%
I am spending the cash or have no new cash to allocate: 8.8%
This week’s Sentiment Survey results:
Bullish: 40.3%, up 5.6 points
Neutral: 20.8%, up 1.9 points
Bearish: 39.0%, down 7.5 points
Historical averages:
Bullish: 37.5%
Neutral: 31.0%
Bearish: 31.5%