VTI - AAII Sentiment Survey: 5-Month High For Bearish Sentiment

2023-10-05 15:24:19 ET

Summary

• Bullish sentiment rebounded by 2.3 percentage points to 30.1%.
• Neutral sentiment declined by 2.9 percentage points to 28.3%.
• Bearish sentiment rose 0.6 percentage points to 41.6%.

Pessimism among individual investors about the short-term outlook for stocks rose for the third consecutive week in the latest AAII Sentiment Survey. Bullish sentiment also rose for the first time in four weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 2.3 percentage points to 30.1%. Even with the increase, optimism is below its historical average of 37.5% for the seventh time in eight weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined by 2.9 percentage points to 28.3%. Neutral sentiment is below its historical average of 31.5% for just the second time in eight weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.6 percentage points to 41.6%. Though modest, it was still a large enough increase to put pessimism at its highest level since May 4, 2023 (44.9%). This is the fifth time in seven weeks that bearish sentiment is above its historical average of 31.0%.

The bull-bear spread (bullish minus bearish sentiment) rebounded by 1.7 percentage points to –11.5%.

Bearish sentiment remains at an unusually high level (more than one standard deviation above its historical average) for the second consecutive week. Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually high readings for bearish sentiment.

This week’s special question asked AAII members how, if at all, they have changed their approach to investing recently. Here are their responses:

• Become slightly more conservative: 27.7%
• Switched around some investments, but modest changes overall: 21.8%
• Become much more conservative/cautious: 19.2%
• Become more aggressive: 6.5%
• No changes: 24.2%

This week’s AAII Sentiment Survey results:

• Bullish: 30.1%, up 2.3 percentage points
• Neutral: 28.3%, down 2.9 percentage points
• Bearish: 41.6%, up 0.6 percentage points

Historical averages:

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

The AAII Sentiment Survey has been conducted weekly since July 1987.

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