DIA - AAII Sentiment Survey: Optimism Rises To Highest Level In 5 Months; Pessimism Falls To Lowest Level In 6 Years

2023-12-14 15:01:15 ET

Summary

• Bullish sentiment increased 4.0 percentage points to 51.3%.
• Neutral sentiment increased 4.1 percentage points to 29.4%.
• Bearish sentiment decreased 8.1 percentage points to 19.3%.

Optimism among individual investors about the short-term outlook for stocks rose to its highest level in nearly five months in the latest AAII Sentiment Survey. Meanwhile, pessimism fell to its lowest level in almost six years.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 4.0 percentage points to 51.3%. Optimism is now unusually high, at its highest level since July 20, 2023 (51.4%). Bullish sentiment is above its historical average of 37.5% for the sixth consecutive week and the seventh time in 10 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 4.1 percentage points to 29.4%. Neutral sentiment is below its historical average of 31.5% for the 10th time in 11 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 8.1 percentage points to 19.3%. Pessimism is unusually low, at its lowest level since January 3, 2018 (15.6%). Bearish sentiment is below its historical average of 31.0% for the sixth consecutive week and the sixth time in 13 weeks.

The bull-bear spread (bullish minus bearish sentiment) increased 12.1 percentage points to 32.0%. The bull-bear spread is above its historical average of 6.5% for the sixth time in 14 weeks.

This week’s special question asked AAII members how they would describe the current valuation of stocks.

Here is how they responded:

• Valuations are mixed, with some stocks expensive and others cheap: 42.3%
• Stocks, in general, are overvalued: 29.4%
• Stocks, in general, are fairly valued: 16.4%
• Stocks, in general, are undervalued: 5.8%
• Not sure/no opinion: 5.8%

This week’s Sentiment Survey results:

• Bullish: 51.3%, up 4.0 percentage points
• Neutral: 29.4%, up 4.1 percentage points
• Bearish: 19.3%, down 8.1 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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