Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> February 21, 2013

Bearish sentiment is above its historical average for the first time in seven weeks, according to the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 0.5 percentage points to 41.8%. This is a seven-week low and the fourth consecutive weekly decline in optimism. Even with the drop, bullish sentiment is above its historical average of 39.0% for the seventh consecutive week and the 12th out of the last 13 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 3.3 percentage points to 25.7%. This is a four-week low. Neutral sentiment is also below its historical average of 30.5% for the 19th consecutive week and the 21st out of the past 23 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.8 percentage points to 32.5%. This is a seven-week high. The historical average is 30.5%.

The spread between bullish and bearish sentiment, the bull-bear spread, is above 0.0 for the 13th consecutive week. This is the longest streak of bullish sentiment staying above bearish sentiment since the 18-week span from December 8, 2011 through April 5, 2012.

We are continuing to see a decline in the level of optimism. This is due to a combination of factors including concerns that the market may have gotten ahead of itself on a short-term basis, the increasing possibility of sequestration occurring and a reversion to the mean. Many AAII members are still optimistic, however, thanks to a combination of the ongoing rise in stock prices, continued economic growth and better-than-forecast fourth-quarter earnings.

This week's special question asked AAII members for their opinion of fourth-quarter earnings. Slightly less than half of respondents described corporate profits as either being good or better than expected. Slightly less than a quarter of respondents described earnings or forward-looking guidance as disappointing.

Here is a sampling of the responses:

• "Earnings seem very positive; the corporations are flush with cash."
• "Given the state of the economy, most [earnings reports] have been surprisingly good."
• "I thought fourth-quarter earnings came in a little better than I thought they would."
• "Mediocre. While most companies beat the street's estimates, those estimates were lowered and reflect a slowing economy."

• Bullish: 41.8%, down 0.5 percentage points
• Neutral: 25.7%, down 3.3 percentage points
• Bearish: 32.5%, up 3.8 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> February 7, 2013

Optimism dropped for the second consecutive week, though still stayed above its historical average, in the latest AAII Sentiment Survey. Pessimism, meanwhile, rose to a five-week high.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 5.3 percentage points to 42.8%. This is a five-week low. Even with the decline, bullish sentiment is above its historical average of 39% for the fifth consecutive week and the 10th out of the last 11 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, is unchanged at 27.7%. This is the 17th consecutive week and the 19th time in 21 weeks that neutral sentiment is below its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 5.3 percentage points to 29.6%. The increase puts pessimism at a five-week high. Nonetheless, bearish sentiment is below its historical average of 30.5% for the eighth time in nine weeks.

Since setting a two-year high of 52.3% two weeks ago, bullish sentiment has fallen by a cumulative 9.5 percentage points. The decline reflects both a concern that stock prices may have risen too much since last November and a reversion to the mean in the survey's results. Many AAII members are still optimistic, however, thanks to a combination of the ongoing rise in stock prices, discussions within Congress to avert sequestration, continued economic growth and better-than-forecast fourth-quarter earnings. Seasonality is also contributing to individual investors' optimistic moods.

This week's special question asked AAII members how they viewed the current valuation of stock prices. An equal number of respondents said that stocks are either fairly valued or overvalued. Only a small group of respondents (less than 10%) think stocks are undervalued. Some members described the market as being overbought, while others thought valuations are slightly high, but not necessarily overvalued.

Here is a sampling of the responses:

• "Stocks are not cheap, and they are not expensive."
• "Stocks are fairly valued, but we are due for a pullback of at least 5%."
• "Overvalued and over-hyped. Stock values are inflated relative to earnings."
• "Overvalued in many cases."
• "Fairly valued, but I'm uncomfortable with the positive attitude toward stocks at this time."

This week's AAII Sentiment Survey results:

• Bullish: 42.8%, down 5.3 percentage points
• Neutral: 27.7%, unchanged
• Bearish: 29.6%, up 5.3 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 31, 2013

Bullish sentiment pulled back, but remained at higher-than-average levels in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.3 percentage points to 48.0%. The decline puts optimism back within the typical range of readings we have seen throughout the survey's history. Bullish sentiment is now above its historical average of 39% for the ninth time in the past 10 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 4.3 percentage points to 27.7%. Even with the improvement, neutral sentiment is below its historical average of 30.5% for the 16th consecutive week and the 18th time in 20 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, was unchanged at 24.3%. This is the seventh time in eight weeks that bearish sentiment is below its historical average of 30.5%.

As noted above, bullish sentiment declined from last week's unusually high reading to within its typical historical range of 28% to 49%. Bearish sentiment, meanwhile, stayed within its typical historical range of 20% to 41%, even though it remains at its lowest level since February 9, 2012. The strong January performance by stocks, action by Congress to avert the fiscal cliff and raise the debt ceiling (at least temporarily), continued economic growth, better-than-forecast fourth-quarter earnings and seasonality are all contributing to individual investors' optimistic moods.

This week's special question asked AAII members how they perceived the strength or weakness of the job market. Responses were mixed, with approximately 40% of respondents saying the job market was improving or at least showing signs of gradual improvement, 32% of respondents describing the job market as weak and 13% describing the recovery as being slow or too slow.

Here is a sampling of the responses:

• "The job market seems to be getting slowly better. It may not be ideal, but slow growth is what we have."
• "Gradual overall strength, but the job market is weighted down by the overall federal financial situation."
• "The job market is weak, but getting less weak."
• "I believe that the perception is that the job market is slowly improving. I do not see this as the reality, only the perception."
• "It's good to be solidly retired!"

This week's AAII Sentiment Survey Results:

• Bullish: 48.0%, down 4.3 percentage points
• Neutral: 27.7%, up 4.3 percentage points
• Bearish: 24.3%, unchanged

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 24, 2013

Bullish sentiment rose to its highest level in two years, while bearish sentiment fell to its lowest level in about a year in the latest AAII Sentiment Survey

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.4 percentage points to 52.3%. The last time optimism was this high was January 13, 2011. This is also the eighth time in nine weeks that bullish sentiment is above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, plunged 5.3 percentage points to 23.4%. This is a seven-week low. It also puts neutral sentiment below its historical average of 30.5% for the 15th consecutive week and the 17th time in 19 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.1 percentage points to 24.3%. This is the lowest level of pessimism registered by our survey since February 9, 2012. It is also the sixth time in seven weeks that bearish sentiment is below its historical average of 30.5%.

Bullish sentiment is at an unusual, but not extraordinarily, high level. In statistical terms, optimism is more than one standard deviation above the historical average. A good start by stocks to the New Year, action by Congress to avert the fiscal cliff and raise the debt ceiling (at least temporarily), continued economic growth, better-than-forecast fourth-quarter earnings and seasonality are all contributing to individual investors' optimistic moods.

This week's special question asked AAII members what economic trends they are currently watching. Responses varied widely and several members listed more than one trend. U.S. fiscal policy, and the political fight over it, was named by the largest number of members. Employment data and housing data tied for second of the most mentioned data. These indicators were followed by interest rates and the direction of stock prices, which tied for third place.

This week's AAII Sentiment Survey results:

• Bullish: 52.3%, up 8.4 percentage points
• Neutral: 23.4%, down 5.3 percentage points
• Bearish: 24.3%, down 3.1 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 17, 2013

Even with a small decline in optimism, more than 40% of individual investors describe themselves as bullish in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 2.5 percentage points to 43.9%. This is the seventh time in eight weeks that optimism has been above 40%. The historical average is 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.1 percentage points to 28.7%. This is a four-week high. Even with the improvement, neutral sentiment remained below its historical average of 30.5% for the 14th consecutive week and the 16th time in 18 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged up 0.4 percentage points to 27.3%. This is the first time since August 2012 that pessimism is below 30% on consecutive weeks. This is also the fifth time in six weeks week that bearish sentiment is below its historical average of 30.5%.

Sentiment about the short-term direction of stock prices shifted last November and we continue to see many individual investors express optimism. There is not one single event which caused this shift, but rather a combination of higher stock prices, monetary stimulus, continued economic growth and seasonality. It is important to note, however, that bullish and bearish sentiment remain well within their typical historical ranges. Thus, while individual investors are comparatively more optimistic, it would be a mistake to describe them as exuberant.

This week's special question asked AAII members how the revised capital gains and dividend tax rates are impacting their short-term outlook. The overwhelming majority of respondents said the new legislation had no impact. Many respondents said they were below the top tax bracket, held their investments mostly in tax-deferred accounts or were long-term investors.

Here is a sampling of the responses:

• "There was little change, so it doesn't matter to me."
• "Very little to not at all. I am not in the highest income bracket that will be affected the most."
• "Not at all. We have ROTH IRAs."
• "Not as much as I thought. I took some capital gains last year, but it was not necessary."
• "At least we know what to expect, so it is a net positive."

This week's AAII Sentiment Survey

• Bullish: 43.9%, down 2.5 percentage points
• Neutral: 28.7%, up 2.1 percentage points
• Bearish: 27.3%, up 0.4 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 3, 2013

For the week ending December 26, 2012, bullish sentiment slipped a bit off of its near-2012 high, as investors waited to see if Congress and the president were going to come to some agreement on spending and taxes to avoid the fiscal cliff. However, bearish sentiment rose for the first time in four weeks.

While a last-minute agreement was reached late New Year's Eve, investors had little time to digest its ramifications for this week's survey. As a result, bullish sentiment fell to its lowest level in six weeks in the latest AAII Sentiment Survey. Bearish sentiment continued its rise.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 5.7 percentage points to 38.7%. This is the lowest level of optimism registered by our survey since November 22, 2012. It is also the first time in six weeks that bullish sentiment fell below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, dipped 0.3 percentage points to 25.1%. This marked the 12th consecutive week that neutral sentiment was below its historical average of 30.6%.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 6.0 percentage points to 36.2%. This is the highest level of pessimism registered by our survey since November 22, 2012. After a three-week departure, bearish sentiment is back above its historical average of 30.6%.

Looking back on 2012, bullish sentiment peaked at 51.6% on February 9, the only time during the year the figure was above 50% and the first time since February 3, 2011. Bullishness reached a low of 22.2% for the year on July 19. This was the lowest bullish reading since August 26, 2010, when it fell to 20.7%. The highest bearish reading for 2012 was 48.8% on November 15. Bearishness bottomed out at 17.2% on January 12.

While the market reacted positively on the first trading day following the fiscal cliff agreement, the bill was a stop-gap measure, with negotiations related to spending cuts and the debt ceiling still to come. The bill will shield millions of middle-class taxpayers from tax increases that were set to go into effect at the beginning of 2013. However, it also will let rates rise on wages and investment profits for households earning more than $450,000 a year. The bill will also delay for two months automatic cuts to the Pentagon and other agencies that had been set to take effect January 1, 2013.

The special question we posed to AAII members over the last two weeks asked which industries or sectors they like right now. Of the 249 responses, a little over 17% of respondents said oil/energy; just under 17% like health care, which includes drugs, pharmaceuticals and biotech; nearly 16% favor financials; 14.5% said they prefer construction, homebuilders, housing and real estate; and almost 13% favor technology. A common theme among respondents was the fiscal cliff and the impact any resolution would have on the various sectors and the overall market.

This week's AAII Sentiment Survey results:

• Bullish: 38.7%, down 5.7 percentage points
• Neutral: 25.1%, down 0.3 percentage points
• Bearish: 36.2%, up 6.0 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.6%
• Bearish: 30.6%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 20, 2012

Bullish sentiment rose to its second-highest level of the year, as bearish sentiment fell for the fourth time in the past five weeks in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.2 percentage points to 46.4%. This is the highest level of optimism registered by our survey since February 9, 2012. It is also the fourth consecutive week that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, rose 2.1 percentage points to 28.8%. Even with the increase, neutral sentiment remains below its historical average of 30.5% for the 10th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.3 percentage points to 24.8%. This is the lowest level of pessimism registered by our survey since February 9, 2012. It is also the first time bearish sentiment has been below its historical average of 30.5% on consecutive weeks since August 23, 2012.

Though bullish sentiment is near its high and bearish sentiment is near its low for the year, both remain well within their typical long-term ranges. Optimism seems high right now because pessimism has been above average for most of this year.

Individual investors' short-term outlook for stock prices has improved over the past few weeks, however. A rebound in stock prices, monetary stimulus, continued economic growth and seasonality are all playing a role. Likely also helping is the crowding out of other potentially negative news headlines by the ongoing fiscal cliff negotiations.

This week's special question asked AAII members how the Federal Reserve's announcement of more bond purchases and introduction of an unemployment rate target impacted their sentiment towards stock. About 40% of respondents said it helps the stocks. Roughly 20% thought it would not have much of an impact. Some respondents said they thought the market has become dependent on monetary stimulus, inflation is a worry or that the recent announcement is bad for bond prices. A few respondents said the fiscal cliff negotiations are having a bigger impact on their short-term outlook.

This week's AAII Sentiment Survey results:

• Bullish: 46.4%, up 3.2 percentage points
• Neutral: 28.8%, up 2.1 percentage points
• Bearish: 24.8%, down 5.3 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.5%
• Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 13, 2012

Bearish sentiment fell to its lowest level since last August, as bullish sentiment increased for the fourth consecutive week, according to the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 1.0 percentage points to 43.2%. This is the highest level of optimism registered by our survey since March 15, 2012. It is also the third consecutive week that bullish sentiment has been above its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 3.5 percentage points to 26.7%. This is a seven-week high. Even with the increase, neutral sentiment is below its historical average of 30.5% for the 11th time in 13 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped by 4.5 percentage points to 30.1%. This is lowest level of pessimism registered by our survey since August 23, 2012. It is also just the fifth time in the past 36 weeks that bearish sentiment is below its historical average of 30.5%.

The market's rebound off of its mid-November lows is causing individual investors to be more optimistic about the short-term direction of stock prices. Also playing a role are further signs of economic growth, such as the November jobs report, and seasonality. It should also be pointed out that this week's readings are fairly close to the historical average, implying that individual investors are neither unusually bullish nor bearish.

This week's special question asked AAII members what influence the ongoing lack of a resolution to the fiscal cliff is having on their short-term outlook for stock prices. About one-third of respondents said the stalemate was having a negative impact, while another equally sized group said it wasn't having any impact. Other respondents said the lack of resolution is causing them to be more cautious or that they expected stocks to stay range-bound until a resolution is reached. A few AAII members said they would view any fiscal cliff-related drop in stock prices as a buying opportunity. Several members expressed frustration with the politicians in Washington.

Here is a sampling of the responses:

• "This [the fiscal cliff negotiations] just adds to the volatility. Long-term investors should just ignore the noise."
• "I'm a long-term investor. The so-called fiscal cliff has no impact on my investment decisions."
• "Very bearish! It's unbelievable our elected officials cannot come to some closure on this."
• "I will hold off on buying; I believe the market will go down without a satisfactory solution."
• "It makes me think the short-term (next month or so) will be volatile for stocks."
• "I believe stocks will be down in the short term, but the fiscal cliff will be resolved and the market will go up."

This week's AAII Sentiment Survey Results:

• Bullish: 43.2%, up 1.0 percentage points
• Neutral: 26.7%, up 3.5 percentage points
• Bearish: 30.1%, down 4.5 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.5%
• Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 6, 2012

Bullish sentiment rose to its highest level since March 29, 2012, even as bearish sentiment stayed above its historical average for the 15th consecutive week in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.3 percentage points to 42.2%. This is both the highest level of optimism registered by the survey and the first time bullish sentiment has been above its historical average of 39% on consecutive weeks since last March.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.5 percentage points to 23.2%. This is the 10th time in 12 weeks that neutral sentiment is below its historical average of 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged up 0.2 percentage points to 34.6%. This is the 15th consecutive week and the 31st out of the last 35 weeks that bearish sentiment is above its historical average of 30.5%.

The short-term outlook among AAII members has improved dramatically since November 15, 2012, with bullish sentiment jumping 13.4 percentage points. A good start to the holiday shopping season and the market's ability to hold steady despite continued uncertainty about the outcome of budget and tax negotiations in Washington are helping to boost optimism.

Seasonality may also be playing a role. In a report last week, Sam Stovall, the chief equity strategist for S&P Capital IQ, said December has the highest monthly average bullish sentiment readings. According to Stovall, since our survey started in 1987, bullish sentiment has averaged 41.8% in December. December also ranks number one in terms of S&P 500 performance. Stovall calculates an average December monthly gain of 1.36% for the S&P 500, using data dating back to 1900.

Even with the improvement in bullish sentiment, it is worth noting that bearish sentiment continues to stay at above-average levels. Failure by Congress and the president to avoid the fiscal cliff would likely have a damaging impact on individual investors' moods, especially if it seemed that the standoff would be protracted. Furthermore, many AAII members remain concerned about the pace of economic growth, ongoing political gridlock and Europe's sovereign debt crisis.

This week's special question asked AAII members for their opinions about companies declaring special dividends or paying their typical first-quarter dividend before the end of this year. The majority of survey respondents said such actions were a good idea given the possibility of higher tax rates next year. Several respondents differed, however, saying that the actions benefited executives and large shareholders, were a ploy to attract new shareholders or may not be the best use of company resources. A small group of respondents were indifferent, saying these actions will have no lasting impact. Several AAII members pointed to the ongoing gridlock over the fiscal cliff as the reason for the special dividends and the accelerated dividend payments. Here is a sampling of the responses:

• "Given the uncertainty about tax reform, this may be a good approach for both the companies and investors."
• "Great. Less potential tax to pay to the IRS."
• "I think it is fine so long as the companies are not borrowing to make the dividend payments."
• "I'm not against it. I really wish, though, we had a political system that absolutely worked for all of us citizens."
• "It is more in the interest of the CEOs and board of directors than in the interest of the average shareholder."
• "I think it is short-sighted and a bad idea."

This week's AAII Sentiment Survey results:

• Bullish: 42.2%, up 1.3 percentage points
• Neutral: 23.2%, down 1.5 percentage points
• Bearish: 34.6%, up 0.2 percentage points

Historical averages:

• Bullish: 39.0%
• Neutral: 30.5%
• Bearish: 30.5%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 29, 2012

Bullish sentiment registered above 40% for the first time since August 23, 2012 in the latest AAII Sentiment Survey. Bearish sentiment continues to stay above its historical average, however.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 5.1 percentage points to 40.9%. This reading ends a 13-week streak of optimism coming in below its historical average of 39.0%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 1.3 percentage points to 24.7%. Even with the increase, this is the 10th time in the past 11 weeks that neutral sentiment is below 30%. The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 6.4 percentage points to 34.4%. This is an eight-week low. Even with the drop, pessimism is above its historical average of 30.5% for the 14th consecutive week and the 30th out of the last 34 weeks.

More individual investors are describing themselves as bullish than bearish for just the second time in the past 10 weeks. The bull-bear spread, which measures the difference between bullish and bearish sentiment, is also at its most positive level since August 23, 2012. The current bull-bear spread is 6.5.

Though this week's survey signals an increase in the level of optimism, it is important to note that this is only the second time since March 29, 2012, that bullish sentiment is above its historical average of 39%. Individual investors remain cautious and failure by Congress and the president to avoid the fiscal cliff would likely have a damaging impact on individual investors' moods. Though some AAII members are encouraged by signs of continued economic growth and the preliminary holiday shopping data, many remain concerned about the pace of economic growth, ongoing political gridlock and Europe's sovereign debt crisis.

This week's special question asked AAII members what this year's holiday shopping trends are saying about the economy. Responses were mixed, with the largest group of respondents saying the early data shows signs of an improving economy, or at least better consumer sentiment. Several members thought consumers are either ignoring the macro environment (including the possibility of the fiscal cliff fears) or are just tired of not spending. Some respondents are worried that consumers are spending money they do not have. There were also several who thought the initial data did not provide much insight into the overall health of the economy.

Here is a sampling of the responses:

• "With holiday spending up slightly, consumers are not letting the fiscal cliff threat spoil their holidays."
• "I'm encouraged by the volume of shoppers reported by the media, but I hope that folks are not spending themselves back into difficult situations."
• "Consumers have become more willing to spend."
• "Consumers don't have much "extra" money, so they are shopping for the lowest priced products."
• "It is very hard to tell as of now, but aside from Black Friday, I feel that people are being careful with their money."
• "Black Friday does not a shopping season make."

The historical average for neutral sentiment was adjusted down by a half a percentage point this week, from 31% to 30.5%. The historical average for bearish sentiment was revised up, from 30% to 30.5%. These revisions reflect a trend we have seen develop in the weekly readings. Over time, we make additional adjustments to the historical averages as the data warrants.

This week's AAII Sentiment Survey results:

• Bullish: 40.9%, up 5.1 percentage points
• Neutral: 24.7%, up 1.3 percentage points
• Bearish: 34.4%, down 6.4 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 15, 2012

Bearish sentiment spiked to its highest level since August 2011, as bullish sentiment fell in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 9.7 percentage points to 28.8%. The drop puts optimism at a four-week low. Bullish sentiment is below its historical average of 39% for the 12th consecutive week and the 32nd time in 33 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.8 percentage points to 22.4%. Even with the increase, neutral sentiment stayed below its historical average of 31% for the ninth time in 10 weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, surged 8.9 percentage points higher to 48.8%. This is the highest pessimism has been since August 4, 2011. It is also the 12th consecutive week and the 28th out of the last 32 weeks that bearish sentiment has been above its historical average of 30%.

Bearish sentiment is at unusually high levels, but not so high that it would be considered extraordinarily high. (In statistical terms, pessimism is less than two standard deviations away from its historical average.) The sharp increase comes as the market has pulled back, some large-cap stocks have declined notably over the past several weeks and uncertainty about the fiscal cliff looms. Many individual investors also continue to fret about the slow pace of economic growth and Europe's sovereign debt crisis.

This week's special question asked AAII members whether they planned to alter their portfolio or keep it unchanged given last week's election results. About two-thirds of respondents said they haven't made any or weren't planning on making any changes. Approximately 20% said they are either reducing their stock holdings or favoring less volatile stocks. A few said they were waiting to see what Congress does, or doesn't do, to resolve the upcoming fiscal cliff.

Here is a sampling of the responses:

• "I will keep to my present strategy of emphasizing solid dividend stocks and a couple of well-performing growth stocks."
• "I'm happy with my asset allocation and don't need to change it."
• "No changes other than taking some capital gains prior to year's end."
• "I plan to continue to tweak my portfolio as opportunities arise, but do not expect to make major sector changes."
• "I'm reducing risk and holding more gold."
• "My plan is to neither buy nor sell until after Congress acts on the fiscal matters."

This week's AAII Sentiment Survey results:

• Bullish: 28.8%, down 9.7 percentage points
• Neutral: 22.4%, up 0.8 percentage points
• Bearish: 48.8%, up 8.9 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 8, 2012

Bullish sentiment rose to its highest level since August, while bearish sentiment remained above its historical average in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.8 percentage points to 38.5%. Optimism was last higher on August 23, 2012. The rise puts bullish sentiment close to its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.7 percentage points to 21.6%. The last time neutral sentiment was lower was October 6, 2011. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.1 percentage points to 39.9%. This is the first time in four weeks that pessimism is below 40%, though the current reading is admittedly just barely below that mark. This is also the 11th consecutive week and the 27th out of the last 31 weeks that bearish sentiment has been above its historical average of 30%.

Bullish sentiment came in above 38% for the just the second time since April 5, 2012, a sign of just how much this year's rally has been mistrusted. Bullish sentiment has been below its historical average of 39% during 31 of the past 32 weeks. Whether this week's numbers mark a turning point or just a temporary blip remains to be seen. It is worth noting, however, that it is not just our survey that has shown an improvement in individual investor sentiment. Data published by the Investment Company Institute shows that the amount of weekly estimated outflows from domestic equity mutual funds has decreased during four out of the past five weeks.

Due to the survey's period of Thursday through Wednesday, the impact of the election's results are only partially reflected in the survey's results. Many individual investors are also cautiously watching Washington to see what will be done about avoiding the fiscal cliff, reducing the debt and aiding stronger economic growth.

This week's special question asked AAII members how much the European sovereign debt crisis is influencing their six-month outlook for stocks, especially relative to six months ago. Responses varied, though about half of the respondents said Europe's debt crisis was not having much of an impact or that their sentiment has not changed because of the crisis. About a third of the respondents said they have a negative outlook or their sentiment has worsened because of the crisis. A smaller group said the crisis has not changed their outlook.

Here is a sampling of the responses:

• "Not a lot. I'm more concerned with our do nothing Congress and the fiscal cliff."
• "Less than six months ago. I think we are suffering from impending-crisis-fatigue."
• "A lot less. I don't know why, because the problem has not gone away, but the anxiety about the situation is gone."
• "I'm not sure that the European Union has the problem solved and wrapped up in a bow, but it's out of the headlines as the fiscal cliff is the worry du jour."
• "It's having a greater influence because the actions thus far have just put off an inevitable disaster."
• "It does cause me to have a concern about how this is going to affect our own markets in the future."

AAII Sentiment Survey:

• Bullish: 38.5%, up 2.8 percentage points
• Neutral: 21.6%, down 1.7 percentage points
• Bearish: 39.9%, down 1.1 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 1, 2012

Bullish sentiment rose to a five-week high, as neutral sentiment fell to its lowest level in over a year in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 6.5 percentage points to 35.7%. This is the highest level of optimism registered by our survey since September 27, 2012. Even with the improvement, bullish sentiment remained below its historical average of 39% for the 10th consecutive week and the 30th out of the last 31 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.4 percentage points to 23.3%. The last time neutral sentiment was lower was October 6, 2011. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 2.1 percentage points to 41.0%. This is the third consecutive week that pessimism has topped 40%. It is also the 10th consecutive week and the 26th out of the last 30 weeks that bearish sentiment has been above its historical average of 30%.

Even with the recent decline, bearish sentiment remains at unusually, but not extraordinarily, high levels. The recent downside volatility and lackluster third-quarter earnings season has dampened the moods of those investors who were already concerned about the pace of economic growth, Europe's sovereign debt problems and the possibility of the fiscal cliff occurring. It is also possible that nervousness about the outcome of the election is having some impact on the results.

The improvement in bullish sentiment, however, shows that some investors are more encouraged about the short-term outlook for stock prices. Continued signs of a growing economy and earnings that are exceeding reduced forecasts are playing a role. Hurricane Sandy may have also inadvertently played a role by crowding out negative financial news headlines.

This week's special question asked AAII members for their opinion of third-quarter earnings. The majority of respondents had a negative view of profits, describing them as sluggish, soft, awful or generally not good. Some said that profits are indicative of an economy that is slowing. A small number of respondents described earnings as being roughly in-line with their expectations or mixed. A few respondents said corporate profits exceeded their expectations.

Here is a sampling of the responses:

• "Shows continued weakness as the economy declines."
• "Revenue is shrinking despite the relative preservation of earnings."
• "Awful, as I expected. It's shocking that they are not worse."
• "They do not look very good so far."
• "They are lower than I expected, but still okay and consistent with a slow growth economy."
• "Mixed, but not as bad as I expected."

This week's Sentiment Survey results:

• Bullish: 35.7%, up 6.5 percentage points
• Neutral: 23.3%, down 4.4 percentage points
• Bearish: 41.0%, down 2.1 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 25, 2012

Individual investors became a little less pessimistic in the latest AAII Sentiment Survey, though bearish sentiment remains at unusually high levels.

Bullish sentiment, expectations that stock prices will rise over the next six months, edged up 0.6 percentage points to 29.2%. This is the first time since July 26, 2012, that optimism is below 30% on consecutive weeks. It is also the ninth consecutive week and the 29th out of the last 30 weeks that bullish sentiment is below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 0.9 percentage points to 27.7%. This is the first time since March 22, 2012, that neutral sentiment is below 30% on consecutive weeks. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.5 percentage points to 43.1%. This is the first time since July 26, 2012, that pessimism is above 40% on consecutive weeks. It is also the ninth consecutive week and the 25th out of the last 29 weeks that bearish sentiment has been above its historical average of 30%.

Year-to-date, bullish sentiment has averaged 35.9%. This puts bullish sentiment on pace for its lowest average weekly reading since 2008, when optimism averaged 34.1%.

Bearish sentiment remains at unusually, but not extraordinarily, high levels. The recent downside volatility and lackluster third-quarter earnings season is further dampening the moods of those investors who were already concerned about the pace of economic growth, Europe's sovereign debt problems and the possibility of the fiscal cliff occurring. It is also possible that nervousness about the outcome of the election is having some impact on the results.

This week's special question asked AAII members if the stock market is presently fairly valued, undervalued or overvalued. Slightly less than half of the respondents said the market was overvalued. The current or expected level of corporate earnings was the primary reason why they thought stocks were too expensive, though many cited the economy, the Federal Reserve's monetary stimulus and the possibility of the fiscal cliff occurring as their rationale. About a third of respondents thought stocks are fairly valued, while acknowledging the potential for downside movement in stock prices. A few respondents cited the outcome of the election as impacting how they viewed valuations.

This week's AAII Sentiment Survey results:

• Bullish: 29.2%, up 0.6 percentage points
• Neutral: 27.7%, up 0.9 percentage points
• Bearish: 43.1%, down 1.5 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 18, 2012

Pessimism rose to its highest level since last June as optimism fell for the fourth consecutive week in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.9 percentage points to 28.7%. This is the lowest level of optimism registered by the survey since July 26, 2012. It is also the eighth consecutive week and the 28th out of the last 29 weeks that bullish sentiment is below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 3.8 percentage points to 26.8%. This ties June 7, 2012, for the lowest reading of 2012. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped up 5.7 percentage points to 44.5%. This is the highest pessimism has been since June 7, 2012. It is also the eighth consecutive week and the 24th out of the last 28 weeks that bearish sentiment has been above its historical average of 30%.

The bull-bear spread, which measures the difference between bullish and bearish sentiment, is at -15.8. This is the most negative the spread has been since July 19, 2012.

Bearish sentiment is at unusually, but not extraordinarily, high levels. Though stocks pulled back last week, the market has rebounded this week. The economic data released over the survey period (Thursday morning through Wednesday night) has mostly matched or topped expectations.

There are a few factors at play. The first is that this year's rally has been disliked, or at least not trusted, by many individual investors. The readings in our survey and the outflows from domestic equity mutual funds reported by the Investment Company Institute both suggest this. Some investors are worried about the potential outcome of the presidential election. There are also ongoing concerns about the pace of economic growth, Europe's sovereign debt problems and the possibility of the fiscal cliff occurring.

It should be noted there are still individual investors who are encouraged by the year's rally in stock prices and improvement in economic data.

This week's special question asked AAII members if they think consumers will spend more or less on holiday shopping this year. (The National Retail Federation forecasts a 4.1% increase in sales.) By an approximate 2-to-1 ratio, respondents thought holiday sales will rise this year. The primary reason cited was better economic conditions and improved consumer confidence. Several responds also thought that many consumers are simply tired of austerity. Among those who thought spending would decline, a weak economic recovery was the most cited reason.

Here is a sampling of the responses:

• "People want to spend more and buy things. They think they have been frugal enough."
• "More. The overall economy is improving, so spending will improve accordingly."
• "More people are employed than last year, so overall spending should increase."
• "Consumers will spend slightly less. Too many are unemployed or underemployed."
• "Less, many consumers are hurting."
• "I just walked through the mall and noticed in the window displays that hemlines are rising. That's all the evidence I need to believe that the market and holiday sales are going up!"

This week's AAII Sentiment Survey results:

• Bullish: 28.7%, down 1.9 percentage points
• Neutral: 26.8%, down 3.8 percentage points
• Bearish: 44.5%, up 5.7 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 11, 2012

Optimism fell to a 10-week low as pessimism rose to its highest level since late July in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 3.3 percentage points to 30.6%. This is the lowest level of optimism since August 2, 2012. It is also the seventh consecutive week and the 27th out of 28 weeks that bullish sentiment is below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.3 percentage points to 30.6%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 5.6 percentage points to 38.8%. This puts pessimism at an 11-week high. Bearish sentiment is above its historical average of 30% for the seventh consecutive week and the 23rd out of the last 27 weeks.

Bullish sentiment and neutral sentiment have only been at equal levels 28 times over the history of the survey. The last time both bullish and neutral sentiment were equal was November 5, 2009.

Four days of declines have dampened optimism about the short-term direction of stock prices and increased concern among those worried about a potential forthcoming pullback. Many individual investors remain focused on slowing global economic growth, Washington politics and the European sovereign debt crisis. The potential outcome of the presidential election is also impacting some investors' sentiment. Those who are optimistic about the short-term outlook are encouraged by improved economic data and this year's rise in stock prices.

This week's special question asked AAII members for their perception of the housing market. Specifically, we asked whether or not the housing market is starting to recover. Most respondents said, yes, the housing market is starting to recover, but many added the caveat of a slow and prolonged recovery. There were also some individual investors who thought the housing market is merely bouncing along the bottom or still has the potential to worsen.

Here is a sampling of the responses:

• "The housing market is starting to recover, but it will take several more years before people's confidence returns."
• "Housing may be recovering, but there are still a lot of foreclosures coming to the market."
• "I am seeing a swing upward, especially here in the San Francisco Bay area of California."
• "I think it is starting to recover, but at lower prices."
• "I believe prices will rise slowly and that low mortgage interest rates will help, but the market will be mostly stagnant because banks are unwilling to lend."
• "I don't think so. Too much shadow inventory and strict regulation on credit. People may have enough income to qualify for a loan, but not the credit rating or down payment."

This week's AAII Sentiment Survey results:

• Bullish: 30.6%, down 3.3 percentage points
• Neutral: 30.6%, down 2.3 percentage points
• Bearish: 38.8%, up 5.6 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 27, 2012

Bearish sentiment rose to its highest level since July 26, 2012, in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.4 percentage points to 36.1%. This is the fifth consecutive week and the 25th out of the past 26 weeks that bullish sentiment is below its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, fell 1.3 percentage points to 27.4%. This is the third consecutive week that neutral sentiment is below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.7 percentage points to 36.5%. Pessimism is now at a nine-week high. Bearish sentiment is above its historical average of 30% for the fifth consecutive week and for the 21st time in the past 25 weeks.

Even though bullish sentiment remains below average, optimism among individual investors remains improved relative to what was registered throughout spring and much of the summer. While bearish sentiment is now at a nine-week high, it is below the May through July readings. Splitting the moods of AAII members are higher stock prices, improved economic data, slowing global economic growth, Washington politics and the European sovereign debt crisis.

This week's special question asked AAII members how the likely forthcoming adjournment by Congress without a deal to avert the fiscal cliff influences their six-month outlook toward stocks. Respondents were nearly evenly split between those who said their sentiment is not affected and those who said it makes them more cautious or more bearish. Several members said their sentiment is not affected because they thought the politicians will reach an agreement to avert the fiscal cliff. Many members expressed frustration, cited the current uncertainty or are awaiting the outcome of the November elections.

Here is a sampling of the responses:

• "It doesn't influence my sentiment, but it sure makes me irate at our government."
• "I think Congress will kick the can down the road, so the fiscal cliff is unlikely."
• "The lack of a solution will lead to significant uncertainty and apprehension, causing a pullback in the stock market."
• "Stocks will drop if nothing is done to resolve the fiscal cliff."
• "I will forgo any major stock purchases until the fiscal cliff issue plays itself out."
• "My outlook remains the same—long-term investing regardless of the political idiocy of the moment."

This week's sentiment survey results:

• Bullish: 36.1%, down 1.4 percentage points
• Neutral: 27.4%, down 1.3 percentage points
• Bearish: 36.5%, up 2.7 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 20, 2012

Bullish sentiment rose to a four-week high, while bearish sentiment rebounded to a eight-week high in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.0 percentage points to 37.5%. This puts optimism at a four-week high. Nonetheless, bullish sentiment is below its historical average of 39% for the fourth consecutive week and the 24th out of the past 25.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.8 percentage points to 28.7%. This is a 12-week low for neutral sentiment. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.8 percentage points to 33.8%. This is the highest level of pessimism registered by our survey since August 2, 2012. Bearish sentiment is also above its historical average of 30% for the 20th time in the past 24 weeks.

Individual investor optimism remains improved relative to what was registered throughout spring and much of the summer. While pessimism is persistently staying above average, it is below the May through July readings. Splitting the moods of AAII members are higher stock prices, improved economic data, slowing global economic growth, Washington politics and the European sovereign debt crisis.

This week's special question asked AAII members how last week's announcement of more monetary stimulus by the Federal Open Market Committee impacted their sentiment toward stocks. There was not a consensus among our members. More than a third of respondents said the move will help stocks. Another 10% thought the move would provide a temporary lift to stocks. Conversely, nearly 30% said the announcement didn't change their sentiment. Some members described the move as being bad for the U.S., while others viewed gold as now being more attractive.

Here is a sampling of the responses:

• "I will be moving more assets out of cash and into stocks."
• "The announcement reaffirmed that fixed income will not satisfy my retirement income needs and an overweight commitment to equities must be maintained."
• "Short term, I feel somewhat more positive about stocks, but I am equally wary of the downside risks of stimulus."
• "It doesn't impact my sentiment toward stocks at all. Although, I don't believe more monetary stimulus will accomplish much of anything."
• "It hasn't affected my sentiment because I'm awaiting for the November election results."
• "The Fed's policy is a disaster. We will get bitten by it sooner or later."

This week's AAII Sentiment Survey results:

• Bullish: 37.5%, up 1.0 percentage points
• Neutral: 28.7%, down 1.8 percentage points
• Bearish: 33.8%, up 0.8 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 13, 2012

Individual investor sentiment turns slightly bullish about the near-term outlook for stocks in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 3.4 percentage points to 36.5%. Bullish sentiment remains below its long-term average of 39%, even with its slight upward bump. Bullish sentiment has been below its long-term average for 23 of the last 24 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 3.4 percentage points to 30.5%. Neutral sentiment fell just below its long-term average for the first time in seven weeks. The historical neutral average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged down 0.1 percentage points to 33.0%. While bearish sentiment is slightly above its historical average of 30%, it has been generally trending down as the market has climbed its "wall of worry."

This week's special question asked AAII members which industries or sectors they currently liked. The largest percentage of AAII members favored the energy sector, with 18% of responses selecting energy. The health care sector had the second highest response rate, with 13% of AAII members selecting this segment. Ten percent of our members favored both commodities (metals) and technology. Two percent of our members indicated that they were on the sidelines, holding cash.

A few of our members looked beyond industries or sectors when answering the question and indicated they currently favored dividend-paying stocks (6%), emerging markets (2%) or contrarian strategies (2%).

Here is a sampling of the responses:

• 18% Energy
• 13% Health Care
• 10% Commodities (Metals)
  
• 10% Technology
• 7% Financial
• 7% Real Estate
• 6% Capital Goods
• 5% Consumer Staples
• 5% Retail
• 4% Utilities
• 2% Agriculture
• 2% Telecommunications
• 6% Dividend-Paying Stocks
• 2% Emerging Markets
• 2% Contrarian Strategies
• 2% Cash

This week's AAII Sentiment Survey results:

• Bullish: 36.5%, up 3.4 percentage points
• Neutral: 30.5%, down 3.4 percentage points
• Bearish: 33.0%, down 0.1 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 6, 2012

Equal numbers of individual investors described themselves as bullish or bearish about the short-term outlook for stocks in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 1.7 percentage points to 33.1%. This puts optimism at a five-week low. The historical average is 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.2 percentage points to 33.9%. This is the sixth consecutive week and the 10th out of the past 12 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged up 0.4 percentage points to 33.1%. This puts pessimism at a five-week high. It also puts bearish sentiment above its historical average of 30% for the second consecutive week.

It is unusual to see bullish and bearish sentiment evenly matched. The last time this occurred was on May 13, 2010. The current split reflects the mixed signals and ongoing uncertainty individual investors are seeing. Though domestic economic data is signaling continued growth and stocks are holding onto their summer gains, concerns about slowing global economic growth, Washington politics and the European sovereign debt crisis are not going away.

This week's special question asked AAII members how their six-to-12 month outlook for U.S. economic growth has changed from last fall. Respondents were split. The largest number of AAII members said their economic outlook has worsened, but this group only slightly outnumbered the groups of individual investors who said their outlook has improved or those who said their outlook remains unchanged. Many members said they were withholding giving an opinion until after the November elections or predicated their answer based on which candidate wins the presidential election.

Here is a sampling of the responses:

• "My outlook is down from bullish to neutral. The fiscal cliff and uncertainty about where the politicians will take us is of serious concern."
• "I see a slight decline in economic activity due to the uncertainty surrounding the election and the problems in Europe."
• "Somewhat more positive, but the economy will still grow at a slow pace."
• "I'm more cautiously optimistic than last fall."
• "The election will be a major factor."

This week's AAII Sentiment Survey results:

• Bullish: 33.1%, down 1.7 percentage points
• Neutral: 33.9%, up 1.2 percentage points
• Bearish: 33.1%, up 0.4 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 30, 2012

Bullish sentiment retreated and pessimism reached a four-week high in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 7.2 percentage points to 34.7%. Optimism is now at a four-week low. Bullish sentiment is also below its historical average of 39% for the 21st time in the past 22 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, edged up 0.5 percentage points to 32.6%. This is the fifth consecutive week and the ninth out of the past 11 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 6.8 percentage points to 32.6%. This is the first time since August 2, 2012, that pessimism is above its historical average of 30%.

A pause in the recent rally deflated some of the cautious optimism registered in last week's survey results. Though some investors are encouraged about the continued growth in the U.S. economy, others remained worried about slowing global economic growth, Washington politics and the European sovereign debt crisis.

This week's special question asked AAII members whether this year's 12.4% rise in the S&P 500 (as of August 23, 2012) is warranted. Responses were almost evenly split, with those who thought the rally wasn't justified slightly outnumbering those who thought it was justified. Reasons varied, though several members cited the Federal Reserve's actions, weak U.S. economic growth and European sovereign problems as reasons why the rally isn't justified. Conversely, several members pointed to corporate earnings and the lack of better investment alternatives as reasons why stocks should be up this year.

Here is a sampling of the responses:

• "Not warranted since the economy is weak and profit margins are not sustainable."
• "I think the rally is somewhat artificial. It's propped up by the Federal Reserve's policies and hype."
• "I'm not totally sure what's causing it. Too many negative areas globally to be that optimistic (China, the Fed, Europe, etc.)."
• "Yes, it is warranted. Where else is there to put your money and get a decent return?"
• "I think last year's flat market and this year's corporate earnings support the 12% rise."
• "Stock prices are catching up with corporate earnings and balance sheet strength, so yes, the rally is warranted."

This week's AAII Sentiment Survey results:

• Bullish: 34.7%, down 7.2 percentage points
• Neutral: 32.6%, up 0.5 percentage points
• Bearish: 32.6%, up 6.8 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 23, 2012

Bullish sentiment is above its historical average for the first time since March 29, 2012, according to the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 5.1 percentage points to 42.0%. This reading ends a streak of 20 consecutive weeks with bullish sentiment readings below the historical average of 39%.

Neutral sentiment, expectations that stock prices will stay unchanged over the next six months, fell 2.9 percentage points to 32.2%. Even with the decline, neutral sentiment is above its historical average of 31% for the fourth consecutive week and the eighth out of the last 10.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 2.2 percentage points to 25.9%. This is the fourth consecutive week that bearish sentiment has declined. It is also the lowest level of pessimism recorded by our survey since March 29, 2012. The historical average is 30%.

Since bullish sentiment reached nearly a two-year low of 22.2% on July 19, 2012, optimism has rebounded by a cumulative 19.8 percentage points. Rising stock prices, a lack of new negative macro headlines and data showing that the U.S. economy is not stalling have all combined to improve individual investors' moods. The optimism is cautious, however, as individual investors continue to fret about slowing global economic growth, Washington politics, and the European sovereign debt crisis. New negative headlines or a return of downward market volatility would dampen the current short-term optimism for stocks.

Bears and contrarians may notice that this week's readings are close to those registered on March 29, 2012, right as the first quarter's rally was reaching its peak. This is simply a coincidence (and hopefully not one that ends up foreshadowing future events). This week's readings are well within the typical ranges we have seen throughout the history of the survey.

This week's special question asked AAII members if they expect the Federal Reserve to announce another round of quantitative easing (QE3) within the next few months. More than half of respondents are not expecting the Fed to act. About a quarter of the respondents expect the Fed to announce another round of monetary stimulus. Other AAII members were split between being unsure, listing the odds of new stimulus as 50/50 or not expecting any action to occur prior to the November elections.

Here is a sampling of the responses:

• "The economy is improving, although slowly. I do not expect another round of quantitative easing."
• "I don't think they're going to do it. Slow growth is acceptable. They've also held back to keep from looking political."
• "Unless the economy gets significantly worse, I don't expect another round of stimulus."
• "I believe there will be QE3, but its real impact will be minimal."
• "I expect there will be another round of stimulus soon, but I don't think there should be any more stimulus."

This week's AAII Sentiment Survey results:

• Bullish: 42.0%, up 5.1 percentage points
• Neutral: 32.2%, down 2.9 percentage points
• Bearish: 25.9%, down 2.2 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 16, 2012

Bearish sentiment remains below 30%, as the AAII Sentiment Survey registered its first back-to-back below average readings for pessimism since April 5, 2012. Bullish sentiment also continues to be below its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, edged up 0.4 percentage points to 36.8%. The increase keeps optimism at its highest level since April 5, 2012. Nonetheless, bullish sentiment is below its historical average of 39% for the 20th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.1 percentage points to 35.1%. Even with the decrease, neutral sentiment is above its historical average of 31% for the third consecutive week and the seventh time out of the past nine weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded 0.7 percentage points to 28.1%. This is the second week that bearish sentiment is below its historical average of 30%.

Some AAII members remain cautiously optimistic about the short-term direction in stock prices as the market holds onto its summer gains. Bullish sentiment remains below its historical average, however, as concerns about slowing global economic growth, Washington politics, the European sovereign debt crisis and further market volatility remain very much front and center. The ongoing streak of below-average bullish sentiment is the longest since a 29-week period between April 2, 1993, and October 15, 1993.

This week's special question asked AAII Members whether this summer's financial industry scandals (Knight Capital, Standard Chartered, Peregrine Financial Group, etc.) have impacted their sentiment toward stocks or if their sentiment is mostly impacted by macro factors (e.g., the economy, Europe, etc.) instead. Respondents overwhelmingly said their sentiment is affected by macro factors, not the recent scandals. Several respondents made the observation that the industry has long had problems, making the recent headlines more noise than anything else.

Here is a sampling of the responses:

• "I'm more concerned about the macro factors, such as the U.S. and Europe. Investors are almost immune now to stories of financial fraud."
• "My sentiment is definitely impacted by macro events; however, I don't like hearing about the shenanigans occurring at Knight Capital."
• "Financial scandals are interesting, but irrelevant. My sentiment depends on a comparison of the stock market's price level versus the U.S. economy."
• "My sentiment toward stocks is affected more by macro factors, including the fact that financial industry scandals have become the norm."
• "I have become more cautious in how I invest and use limit orders when buying or selling securities."

This week's AAII Sentiment Survey results:

• Bullish: 36.8%, up 0.4 percentage points
• Neutral: 35.1%, down 1.1 percentage points
• Bearish: 28.1%, up 0.7 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 9, 2012

The percentage of AAII members describing themselves as bullish topped those describing themselves as bearish for the first time since May 3, 2012, according to the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 6.0 percentage points to 36.5%. This is the highest level of optimism registered by the survey since April 5, 2012. Even with the increase, bullish sentiment is below its historical average of 39% for the 19th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.5 percentage points to 36.2%. This is the highest neutral sentiment has been since December 22, 2011. It is also the fifth time in six weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 7.6 percentage points to 27.4%. Pessimism was last lower on March 29, 2012. This is the first time in 14 weeks and just the second time in 18 weeks that bearish sentiment is below its historical average of 30%.

The ongoing rise in stock prices is giving some AAII members hope about the short-term direction of stock prices and is curtailing short-term fears for others. The optimism is cautious, however, as concerns about slowing global economic growth, Washington politics, the European sovereign debt crisis and further market volatility remain very much front and center. The ongoing streak of below average bullish sentiment is the longest since a 29-week period between April 2, 1993, and October 15, 1993.

This week's special question asked AAII members whether the recent statements by European Central Bank President Mario Draghi, including his intent to do whatever it takes to preserve the euro, have impacted their sentiment. Slightly more than half of respondents said Draghi's words have not impacted their sentiment. Many of these individual investors perceive Draghi as simply adding to the ongoing chatter, instead of offering a solution. A sizeable minority said Draghi's comments have made them more optimistic. A smaller minority said they have become more pessimistic.

Here is a sampling of the responses:

• "Draghi's comments—like an elevator's close button or Congress—are there, but are of no use."
• "Draghi has made me even more suspect about the depth of European leaders' willingness to admit the severity of their financial situation."
• "He is managing the perception of certain investors, but needs to bring action before he changes my feelings."
• "They had a positive impact on my sentiment, but I want to see what European leaders actually do before committing additional funds to the international market."
• "It makes me feel the ECB will be proactive in saving the euro."
• "I'm even more bearish now. More talk, less action means the day of reckoning is yet to come."

This week's AAII Sentiment Survey Results

• Bullish: 36.5%, up 6.0 percentage points
• Neutral: 36.2%, up 1.5 percentage points
• Bearish: 27.4%, down 7.6 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 2, 2012

Bullish sentiment rose to a four-week high, as pessimism ebbed in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.3 percentage points to 30.4%. This is the highest level of optimism registered by our survey since July 5, 2012. Even with the increase, bullish sentiment is below its historical average for the 18th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, jumped 5.9 percentage points to 34.6%. The increase puts neutral sentiment above its historical average of 31% for the fifth time in seven weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 8.2 percentage points to 34.9%. This is a four-week low for pessimism. Even with the decrease, bearish sentiment is above its historical average for the 13th consecutive week and the 16th out of the last 17 weeks.

Bullish sentiment has risen only to the lower end of the range where historical readings have typically registered. The sustained above-average pessimism and the above-average neutral readings indicate many AAII members are not convinced that the recent upward move in stock prices will continue. Market volatility, slowing global economic growth, Washington politics and the European sovereign debt crisis are all continuing to fray the nerves of individual investors.

Yesterday's trading problems at market maker Knight Capital Group occurred near the end of the survey period. The volatility created within certain stocks by the technology issues at the firm was another dark cloud for those investors who already lacked confidence in the stock market. Quantifying the actual impact is difficult, however, since most individual investors do not know where their orders are routed.

This week's special question asked AAII members if they have recently begun bargain shopping or, if they haven't, whether there was a price level that would encourage them to start looking for bargains. The majority of respondents said no, they have not started to look for bargains. Many in this group said a further price drop of 10% to 20% would encourage them to start bargain hunting. A small group of respondents said they were either already fully invested or are more focused on long-term allocation strategies.

Less than 20% of respondents said, yes, they are currently bargain hunting for stocks. Within this group, several said they were always on the lookout for attractive stocks at good prices.

Here is a sampling of the responses:

• "Not yet. I'm worried about a macro event causing a 10% to 20% drop. Within that range, I would be buying."
• "A 20% drop would motivate me to consider buying dividend growth stocks, which are now fairly valued or overpriced."
• "A 10% drop would be good enough to start bargain hunting."
• "No. I keep a balanced portfolio of corporate bonds and equity ETFs. I rebalance twice a year, if needed."
• "I'm mildly and cautiously bargain hunting—a 20% drop would send me into a greed-fueled buying frenzy."
• "I'm always hunting for good stocks."

This week's AAII Sentiment Survey results:

• Bullish: 30.4%, up 2.3 percentage points
• Neutral: 34.6%, up 5.9 percentage points
• Bearish: 34.9%, down 8.2 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 26, 2012

Bullish sentiment rebounded, but stayed below an unusually low level of 30% for the second consecutive week in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 5.9 percentage points to 28.1%. Even with the improvement, this is the first time optimism has been below 30% for two consecutive weeks since May 31 and June 7, 2012 This is also the 17th consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, plunged 7.3 percentage points to 28.8%. This is only the second time in the past six weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.3 percentage points to 43.1%. This is a four-week high for pessimism. It is also the 12th consecutive week and the 15th out of the last 16 weeks that bearish sentiment has been above its historical average of 30%.

AAII members continue to worry that further declines in stock prices could occur over the short term. Bullish sentiment is in the midst of its longest streak of below-average readings since a 29-week period between April 2, 1993, and October 15, 1993. Market volatility, slowing global economic growth, Washington politics and the European sovereign debt crisis are all responsible for the downbeat outlook.

This week's special question asked AAII members whether slowing global economic growth, the potential U.S. fiscal cliff or the European sovereign debt crisis pose the greatest risk for stock prices. Members were split between the three, though the fiscal cliff-the potential for significant budget cuts and the expiration of tax cuts-received just a few more votes than slowing growth or the European crisis. Several members said all three pose significant risks.

Here is a sampling of the responses:

• "The U.S. fiscal cliff because all solutions hamper growth. Doing nothing puts us on the brink of disaster."
• "The U.S. fiscal cliff. The world needs the U.S. economy to be decent and this could kill it."
• "The European sovereign debt crisis. The fall of the euro will lead to a global banking crisis."
• "Slowing economic growth is the greatest risk because it will exacerbate both of the other risks."
• "Each risk is hard to quantify and if a worse case scenario occurs, it could have a significant impact on stock prices."

This week's AAII Sentiment Survey:

• Bullish: 28.1%, up 5.9 percentage points
• Neutral: 28.8%, down 7.3 percentage points
• Bearish: 43.1%. up 1.3 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 19, 2012

Bullish sentiment fell to nearly a two-year low in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 8.0 percentage points to 22.2%. This is the lowest that optimism has been since August 26, 2010. It is also the 68th lowest bullish sentiment reading out of more than 1,300 weekly readings in the survey's history. Optimism has now been below its historical average of 39% for 16 consecutive weeks.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rose 1.0 percentage point to 36.0%. This is an 11-week high for neutral sentiment. It is also the fourth time in five weeks that neutral sentiment is above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 7.1 percentage points to 41.8%. This is the 11th consecutive week and the 14th out of the last 15 weeks that bearish sentiment has been above its historical average of 30%.

The last time bullish sentiment was lower, August 26, 2010, the market reached a short-term bottom. Though very low bullish readings have been correlated with short-term term market rebounds, optimism among individual investors can stay at low levels for a period of time.

For example, bullish sentiment fell to 18.0% on August 17, 1990. Six months later on January 25, 1991, bullish sentiment was still low at 25.0%. Over that time period, the S&P 500 rose a mere 2.5%. Thus, while our survey has been correlated with market reversals, low bullish (or bearish) readings are not causal events.

This week's special question asked AAII members whether they thought the stock market overall is presently fairly valued, undervalued or overvalued. The votes were very close, with those describing the market as overvalued only slightly exceeding the number who said the market was undervalued or fairly valued. AAII members are split about whether fears about slowing economic growth and sovereign debt problems have been fully priced into the market.

Here is a sampling of the responses:

• "Overvalued, because of sluggish U.S. economic growth, S&P earnings estimates are too high, reduced demand from Europe and China and the drag of federal debt."
• "Overvalued, since earnings will be depressed going forward due to the trend in the worldwide economy."
• "Fairly valued, given the overreactions to the fears about European debt and national and international economic growth."
• "Fairly valued. While price-earning ratios are a little low, the election and European weakness provide increased uncertainty and fear."
• "Undervalued based on historical price-earnings ratios."
• "Undervalued. Everybody is scared to death."

This week's AAII Sentiment Survey results:

• Bullish: 22.2%, down 8.0 percentage points
• Neutral: 36.0%, up 1.0 percentage points
• Bearish: 41.8%, up 7.1 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 12, 2012

Bullish sentiment declined, extending its streak of consecutive below-average readings, in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 2.4 percentage points to 30.2%. This is the 15th consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.0 percentage points to 35.0%. This is a 10-week high for neutral sentiment.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.4 percentage points to 34.7%. This is the 10th consecutive week and the 13th out of the last 14 weeks that bearish sentiment has been above its historical average of 30%.

This is the longest streak of consecutive below-average bullish readings since a 29-week period that ran from April 2, 1993, until October 15, 1993. Typically, periods of below average optimism have been interrupted by one or two weeks of above-average bullish sentiment. This has not been the case during the current streak.

AAII members remained worried about the pace of global economic growth and the ongoing sovereign debt crisis in Europe. Also fraying their nerves is the ongoing volatility in stock prices.

This week's special question asked AAII members about their expectations for second-quarter earnings. Responses were mixed, with the largest number of respondents bracing for disappointing results, marked by declines in profits. The next-largest group thought earnings would be in line with expectations and not show much year-over-year growth. The third-largest group is optimistic that profits grew last quarter.

This week's AAII Sentiment Survey results:

• Bullish: 30.2%, down 2.4 percentage points
• Neutral: 35.0%, up 1.0 percentage points
• Bearish: 34.7%, up 1.4 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 5, 2012

Bearish sentiment fell to a nine-week low in the latest AAII Sentiment Survey, while both bullish and neutral sentiment rose.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.0 percentage points to 32.6%. Even with the increase, optimism remains below its historical average of 39% for the 14th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, spiked 7.1 percentage points to 34.0%. This is a nine-week high for neutral sentiment. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 11.0 percentage points to 33.3%. This is the lowest level of pessimism since May 3, 2012. Even with the drop, bearish sentiment is above average for the ninth consecutive week and the 12th week out of the last 13 weeks.

The recent bounce to a two-month high in stock prices lessened the glum our survey has been indicating, but not so much that individual investors can be described as being sanguine. Worries about the pace of U.S. economic growth and Europe's sovereign problems continue to weigh on sentiment.

This week's special question asked AAII members if the Supreme Court's decision to uphold the health care law impacted their sentiment toward stocks. The results were mixed, with the largest number of respondents saying the ruling did not alter their sentiment. The second-largest number said it made them more bearish, while the third-largest group said the ruling made them more bullish.

Here is a sampling of the responses:

• "Not much impact. We'll have to wait and see what happens. It does, however, change the way I see the elections."
• "The Supreme Court's decision brings some closure to the matter. I believe it will have mixed effects."
• "It has not impacted my sentiment. I am more concerned about the fiscal cliff looming ahead."
• "Negatively. This is a higher tax on investment income and moves us further from solving economic problems."
• "I see the ruling as a strong positive for the markets, though I think it will take some time for the impact to be felt."

This week's AAII Sentiment Survey results:

• Bullish: 32.6%, up 4.0 percentage points
• Neutral: 34.0%, up 7.1 percentage points
• Bearish: 33.3%, down 11.0 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> June 28, 2012

The percentage of individual investors describing themselves as bearish rebounded by 8.5 percentage points to 44.4% in the latest AAII Sentiment Survey. Meanwhile, both bullish and neutral sentiment declined.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.2 percentage points to 28.7%. This is the seventh time in the past 12 weeks that optimism has been below 30%. It is also the 13th consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 4.3 percentage points to 27.0%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 8.5 percentage points to 44.4%. This is the 11th time in 12 weeks that bearish sentiment has been above its historical average of 30%.

This week's changes brought pessimistic levels back to where they were near the start of June. We are continuing to see ongoing pessimism among individual investors about the short-term direction of stock prices. The current 13-week streak of below-average bullish sentiment is the longest since a 14-week stretch from December 20, 2007, through March 20, 2008. The current eight-week streak of above average bearish sentiment is the longest since a 14-week stretch from July 21, 2011, through October 20, 2011.

AAII members continue to be casting a wary eye toward events in Europe and are concerned about the slowing pace of economic growth in here in the United States.

This week's special question asked AAII members what near-term catalyst would change their sentiment toward stocks. The largest number of respondents said some type of resolution to the European sovereign debt would be a positive catalyst. Other potential bullish catalysts included stronger U.S. economic growth, the outcome of the U.S. presidential election (respondents differed between whether a win by Mitt Romney or a President Obama would be a positive catalyst) and a resolution to the forthcoming expiration of tax cuts and the implementation of spending cuts (the so-called "fiscal cliff").

Some members foresaw potentially negative catalysts. These members cited a worsening of the European sovereign debt crisis and slower economic growth in either the U.S. or China.

Here is a sampling of the responses:

• "A solid plan to deal with the European crisis that member nations stand behind would be bullish for the market."
• "If Europe settles its government/bank liquidity problems, I would be more bullish."
• "More jobs being created in the United States would create an avalanche of buying in the market."
• "Even a partial compromise by Congress and the White House on closing the deficit would make me very bullish. I'm expecting that will occur when pigs fly."
• "A slowdown in the U.S. economy would make me somewhat more bearish over the short term."

This week's AAII Sentiment Survey results:

• Bullish: 28.7%, down 4.2 percentage points
• Neutral: 27.0%, down 4.3 percentage points
• Bearish: 44.4%, up 8.5 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> June 21, 2012

Bullish sentiment declined slightly, while bearish sentiment was essentially unchanged in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.1 percentage points to 32.9%. This is the 12th consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 31.2%. This puts it about even with the historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, edged up 0.1 percentage points to 35.9%. This is the 10th time in 11 weeks that bearish sentiment has been above its historical average of 30%.

This is the longest streak of consecutive below-average readings for bullish sentiment since a 14-week stretch from December 20, 2007, through March 20, 2008. Many individual investors remain fearful that further declines in stock prices could occur. Worries that the European sovereign debt crisis and a slower pace of U.S. economic growth will lead to a repeat of last summer's correction are keeping pessimism at above-average levels.

This week's special question asked what the Federal Open Market Committee should do over the next few months, if anything, to help the U.S. economy. (The results were tabulated before yesterday's FOMC meeting statement was released.) Most respondents said the Fed should do nothing. The reasons varied from a belief that additional stimulus won't help to worries about the potentially negative effects that previous stimulus actions will have to opinions that the Fed should wait for events in Europe and the November elections to unfold.

Among the small number of respondents who thought the Fed should act, most thought more stimulus should be provided. Some, however, thought the Fed should allow interest rates to rise.

Here is a sampling of the responses:

• "No additional quantitative easing. I doubt it will work."
• "Nothing. The Fed has done enough."
• "Leave us alone and stop printing money."
• "Nothing, other than continuing to watch the economy and being prepared to act."
• "I don't think Bernanke has many options left."

This week's AAII Sentiment Survey results:

• Bullish: 32.9%, down 1.1 percentage points
• Neutral: 31.2%, up 1.1 percentage points
• Bearish: 35.9%, up 0.1 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> June 14, 2012

Bullish sentiment rose to a six-week high, while bearish sentiment plunged in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 6.6 percentage points to 34.0%. This is the highest level of optimism since May 3, 2012. Nonetheless, bullish sentiment is below its historical average of 39% for the 11th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 3.4 percentage points to 30.2%. Even with the improvement, neutral sentiment stayed below its historical average for the fifth consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 10.0 percentage points to 35.8%. This is the largest one-week drop in pessimism since January 5, 2012. Even with the plunge, bearish sentiment is above its historical average of 30% for the ninth time out of the past 10 weeks.

The recent rebound in stock prices helped to calm the nerves of some investors, but many remain fearful that further declines could come. Worries that the European sovereign debt crisis and a slower pace of U.S. economic growth will lead to a repeat of last summer's correction are keeping pessimism at above-average levels. As we noted last week, nearly half of surveyed AAII members said they were taking on less risk than they were six months ago.

This week's special question asked AAII members if they thought stock valuations are now attractive from a long-term standpoint. Approximately two-thirds of respondents said yes, they are. The primary reasons given were strong balance sheets and low price-earnings ratios. Close to a third of respondents said no, valuations are not attractive. These members cited sovereign debt problems and expectations that stock prices will fall further.

Here is a sampling of the responses:

• "Valuations are attractive. Productivity and profits continue to rise."
• "Yes, due to low multiples and strong corporate balance sheets."
• "Yes. The large corporations have good balance sheets, and price-earnings ratios are attractive."
• "No, profit margins are near all-time highs. I believe they will revert closer to the mean in the years ahead."
• "No, the market will fall further before the election and Europe are settled."

This week's AAII Sentiment Survey results:

• Bullish: 34.0%, up 6.6 percentage points
• Neutral: 30.2%, up 3.4 percentage points
• Bearish: 35.8%, down 10.0 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> June 7, 2012

Bearish sentiment spread among individual investors to an unusually high level, while bullish sentiment deteriorated in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 0.6 percentage points to 27.4%. This is the tenth consecutive week that optimism has been below its historical average of 39%. The current bullish sentiment reading is more than one standard deviation below the long-term average.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, declined 3.2% to 26.8%. This is the fourth consecutive week that neutral sentiment has been below its historical average of 31%. It is the lowest neutral reading since December 15, 2011.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.8 percentage points to 45.8%. This is the eighth time in the past nine weeks that pessimism has been above its historical average of 30%. It is the second week in row that bearish sentiment exceeded the long-term average by more than one standard deviation.

The spread between bullish and bearish sentiment, the bull-bear spread, widened to -18.4 percentage points. This is the fourth negative double-digit spread in the past five weeks.

This week's special question asked AAII members if they have become more aggressive in their investing, are investing more conservatively, or stayed at about the same risk level relative their investing profile six months ago.

Just over half of our members (51%) indicated that they were taking on less risk, investing more conservatively than six months ago. These investors are concerned about the potential of a stalling U.S. economy, the risk of a budget showdown and sequestration during an election year, and the European financial crisis and its impact on our markets and economy.

One-third of our respondents (33%) noted that they were taking on about the same amount of risk with their portfolio as they did six month ago. Many of these investors felt confident in their financial plan and are sticking with their asset allocation.

Only 16% of the respondents in the survey indicated that they were taking on more risk and investing more aggressively today compared to six month ago. These investors feel that stocks offer the best opportunity today, with an environment of low interest rates. They are buying good-quality companies as share prices decline. They are looking for bargains now that stocks are on sale. One member even quoted Baron Rothschild, who said that you should "Buy when there is blood in the streets."

Here is a sampling of the responses:

• "Less risk for now. Nothing is going to get resolved in D.C. until the election. The risk of a short-term budget showdown in a lame duck Congress is too great."
• "Extremely more conservative: Europe is about to blow, the U.S. economy is about to stall, the market is sending out bearish signals."
• "Less risk for the summer. Market will likely enter bear territory in the summer before reversing and finishing the year higher."
• "A slow and steady investment in good companies has worked well enough, no need to change."
• "I'm sticking to my asset allocation model."
• "As a long-term investor, I continue to buy common stocks on dips in the market."

This week's AAII Sentiment Survey Results:

• Bullish: 27.4%, down 0.6 percentage points
• Neutral: 26.8%, down 3.2 percentage points
• Bearish: 45.8%, up 3.8 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 31, 2012

Bearish sentiment rebounded to an unusually high level, while bullish sentiment remained at below-average levels in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.5 percentage points to 28.0%. This is the ninth consecutive week that optimism has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged, declined 0.9% to 30.0%. This is the third consecutive week that neutral sentiment has been slightly below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.4 percentage points to 42.0%. This is the seventh time in the past eight weeks that pessimism has been above its historical average of 30%.

The spread between bullish and bearish sentiment, the bull-bear spread, widened to -14 percentage points. This is the third negative double-digit spread in the past four weeks.

Bearish sentiment rebounded back to an unusually high level. This is the third time in the past four weeks, and the fourth out of the last eight, that pessimism has exceeded 41%. Bullish sentiment, on the other hand, is right at the separating point between the typical range of readings and a level that is unusually low.

Individual investors remain concerned about the European sovereign debt crisis, the pace of U.S. economic growth, and the recent downward volatility in stock prices. Underlying this are fears that a repeat of last summer's correction could occur this year. Also playing a role in hurting sentiment is the lack of positive catalysts.

This week's special question asked AAII members what they thought about the Facebook (FB) initial public offering. Many respondents said the IPO was overvalued, overhyped or otherwise risky. Some said they were not surprised by the poor performance of the stock, and thought the market was acting in an efficient manner. A few said they were surprised about how the IPO was handled with some going as far as to call the offering a "fiasco". Others were more critical and opined that the investment industry puts individual investors at disadvantage, especially relative to institutional investors.

Here is a sampling of the responses:

• "I felt it was overhyped from the beginning."
• "There was adequate information regarding Facebook to make an investor wary of the IPO's outcome.
• "It fulfilled my expectations in every respect. I didn't see Warren Buffett investing in this turkey."
• "The market worked the way it should when presented with a problem offering."
• "It was a fiasco that can dampen individual investors' enthusiasm for IPOs in particular, and the stock market in general."
• "It gives further credence to the theory that the market is rigged toward the big-money investors and against regular people."

This week's AAII Sentiment Survey Results:

• Bullish: 28.0%, down 2.5 percentage points
• Neutral: 30.0%, down 0.9 percentage points
• Bearish: 42.0%. up 3.4 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 17, 2012

Bullish sentiment is near a two-year low in the latest AAII Sentiment Survey, while bearish sentiment has spiked by 17.5 percentage points over the past two weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 1.8 percentage points to 23.6%. This is the lowest level of optimism recorded in the survey since August 26, 2010. This is also the seventh consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 2.1 percentage points to 30.4%. This is the just the second time in the past eight weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.9 percentage points to 46.0%. This is the highest level of pessimism recorded by the survey since September 29, 2011. This is also the sixth consecutive week that bearish sentiment has been above its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, widened to -22.4 points. This is the most negative the bull-bear spread has been since September 22, 2011.

Bullish sentiment is unusually low, but it would have to fall below 18% to be considered extraordinarily low (two standard deviations below average). Similarly, bearish sentiment above 50% or a bull-bear spread below -29 points would be more correlated with market reversals. Last year, bearish sentiment topped 46% three times during August and September.

The two-week decline in stock prices, renewed uncertainty about Europe, and signs of slower U.S. economic growth have combined to fray the nerves of individual investors. The 17.5 percentage point rise in bearish sentiment over the past two weeks shows that many investors are second-guessing their prior short-term outlooks.

This week's special question asked AAII members if they are concerned that a repeat of last year's market correction could occur this summer. The overwhelming majority of respondents said that yes, they are concerned that a correction will occur. Most of them cited Europe as the primary problem. The minority of respondents who were not concerned either thought that the negative headlines were mostly priced in or are planning to buy stocks on any summer decline.

Here is a sampling of the responses:

• "I feel like the issues in Greece, France and Spain are going to cause an economic downturn here in the United States."
• "Yes, my primary concern is Europe and its unsettling influence on the U.S. markets."
• "Yes, I'm concerned because of the European banking crisis, particularly Spain and the possibility of a Greek default."
• "I'm concerned about it, but I think there's good a chance that the market is recovering, albeit with a bumpy ride."
• "No, I'm not concerned because if it does recur like last year, August—September could become a likely timeframe to buy into stocks."

This week's AAII Sentiment Survey results:

• Bullish: 23.6%, down 1.8 percentage points
• Neutral: 30.4%, down 2.1 percentage points
• Bearish: 46.0%, up 3.9 percentage points\

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 10, 2012

Bearish sentiment rose to a seven-month high, while bullish sentiment fell to an eight-month low in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, plunged 10.0 percentage points to 25.4%. This is the lowest level of optimism recorded by the survey since September 22, 2011. This is also the sixth consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will fall over the next six months, fell 3.6 percentage points to 32.5%. This is a four-week low. Nonetheless, neutral sentiment is above its historical average of 31% for the fourth consecutive week and the sixth out of the past seven weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, jumped 13.6 percentage points to 42.1%. This is the highest level of pessimism recorded by the survey since October 6, 2011. It is also the fourth time in the past five weeks that bearish sentiment has been above its historical average of 30%.

Bullish sentiment is at an unusually low level, and bearish sentiment is at an unusually high level. In quantitative terms, both readings are more than one standard deviation from their historical norms. Last year, bearish sentiment exceeded 44% five times between August and October. Thus, though pessimism is unusually high, it is not high enough to be correlated with a forthcoming market reversal. A bearish sentiment reading above 50% would be a stronger contrarian signal.

Disappointing April employment data, the French presidential election, and a return of downside market volatility combined to fray individual investors' nerves. The continuing above-average level of neutral sentiment, however, shows that there is an ongoing push and pull of bullish factors (e.g., improved corporate profits, U.S. economic growth) and bearish factors (concerns about the pace of growth, Europe, high gas prices, etc.).

This week's special question asked AAII members what, if any, impact the current uncertainty about 2013 tax rates is having on their outlook for stocks. The majority of respondents said it was not impacting their outlook. Several members, however, thought the possibility of higher taxes next year is a negative factor.

Here is a sampling of the responses:

• "I don't expect taxes to change much, and there will be little impact on the economy."
• "None. Huge tax increases are politically unlikely."
• "None. I'm reasonably certain the dysfunctional idiots in Congress will agree on a fix at two minutes to midnight, as they usually do."
• "A very big uncertainty. It will drive decisions in the near-term to best take advantage of taxes."
• "The perceived outcome of the election will have a sizeable impact on the market because of its implications for tax policy."

This week's AAII Sentiment Survey results:

• Bullish: 25.4%, down 10.0 percentage points
• Neutral: 32.5%, down 3.6 percentage points
• Bearish: 42.1%, up 13.6 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 3, 2012

Neutral sentiment reached a six-month high in the latest AAII Sentiment survey. Bullish sentiment rose, while bearish sentiment fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded 7.8 percentage points to 35.4%. This is the highest level of optimism in a month. Nonetheless, bullish sentiment remained below its historical average of 39% for the fifth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 1.2 percentage points to 36.1%. This is the highest neutral sentiment has been since December 22, 2011. It is also the fifth time in six weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 8.9 percentage points to 28.5%. This is a four-week low for pessimism. It is also the first time in four weeks that bearish sentiment has been below its historical average of 30%.

A recent rebound in stock prices following the recent dip and mixed economic data are combining to keep neutral sentiment at above-average levels. Better-than-expected first-quarter profits, signs of continued economic growth and a return of some upside volatility in stock prices are helping optimism. Conversely, volatile market conditions, concerns about the pace of domestic economic growth, high gasoline prices, and the ongoing European sovereign debt crisis are keeping many individual investors pessimistic.

This week's special question asked AAII members if they thought prospects for the U.S. economy have improved over the past few months. The responses were evenly split. Among those who thought conditions have not improved, Europe's sovereign debt crisis was frequently mentioned as an ongoing threat. Others said economic conditions, including inflation, were worse than the data suggests. Among those who thought the economy is getting better, improvements in the economic data and the markets were cited. Respondents in both groups said they were keeping an eye on events in Congress and on the outcome of the upcoming presidential election.

Here is a sampling of the responses:

• "We're still in slow growth mode. Housing is still in the doldrums, and the slowdown in Europe doesn't help."
• "I think the European economy will drag down the U.S. economy in the next three to six months, regardless of what the Fed does."
• "I fail to discern any fundamental changes one way or the other. If anything, the potential for adverse occurrences has marginally increased."
• "Prospects are much improved. The economic data is showing a slow, but steady recovery."
• "The core economy is improving as people get back to work and demand improves."
• "The mall is full of people."

This week's AAII Sentiment Survey results:

• Bullish: 35.4%, up 7.8 percentage points
• Neutral: 36.1%, up 1.2 percentage points
• Bearish: 28.5%, down 8.9 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> April 26, 2012

Bullish sentiment fell to a seven-month low in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 3.5 percentage points to 27.6%. This is the lowest level of optimism recorded in the survey since September 22, 2011. This is also the fourth consecutive week that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, was unchanged at 35.0%. This is the fourth time in five weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 3.6 percentage points to 37.4%. This is the third consecutive week that bearish sentiment has been above its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, worsened to -9.8 percentage points. This is the first time the spread has been negative for three consecutive weeks since October 6, 2011.

There does not seem to be one single factor that is dampening individual investor optimism. Rather, it is the combination of more volatile market conditions, concerns about the pace of economic growth, high gasoline prices, the ongoing European sovereign debt crisis and uncertainty about China's economy that has caused more investors to be more pessimistic than optimistic about the short-term direction of stock prices.

This week's special question asked AAII members if they viewed the recent rise in Spanish bond yields as a continuance of the negative headlines out of Europe or if the higher yields have caused them to be more fearful than they were a few months ago. Approximately half of the respondents said the event has not changed their sentiment, but rather they viewed it as a continuation of the ongoing sovereign debt problems. A notable number of respondents, however, said they are more fearful than they were a few months ago.

Here is a sampling of the responses:

• "It seems to be a continuation of the negative headlines that will probably go on for years."
• "I have never stopped being fearful about Europe."
• "Europe will go up and down during the next two years. The European Central Bank and the IMF will keep any bad situation from spreading."
• "Not more fearful; I just don't see any real improvement."
• "I am more fearful because the Spanish economy is so much larger than the Greek economy. This contagion in Europe is not over yet."

This week's AAII Sentiment Survey results:

• Bullish: 27.6%, down 3.5 percentage points
• Neutral: 35.0%, unchanged
• Bearish: 37.4%, up 3.6 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> April 19, 2012

Neutral sentiment rose to a four-month high in the latest AAII Sentiment Survey. Pessimism about the short-term direction of stock prices topped optimism for the second consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded to 31.2%. Despite the three-percentage-point rise, bullish sentiment stayed below its historical average of 39% for the second consecutive week.

Neutral sentiment, expectations that stock prices will stay unchanged over the next six months, jumped 4.7 percentage points to 35.0%. This is the highest neutral sentiment has been since December 22, 2011. It is also the third time in four weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stocks prices will fall over the next six months, fell to 33.8%. Even with the 7.7-percentage-point plunge, bearish sentiment stayed above its historical average of 30% for the second consecutive week.

The difference between bullish and bearish sentiment, the bull-bear spread, narrowed to -2.6 percentage points. This is the first time the spread has been negative for two consecutive weeks since December 1, 2011.

Neutral sentiment readings at the current level have been unusual over the past few years. Since the bear market ended in March 2009, neutral sentiment has only registered 35% or higher six times. The recent return of volatility to the market combined with conflicting signals about the U.S. and the global economy are having an impact on individual investor sentiment.

This week's special question asked AAII members whether gasoline's rise to a national average of nearly $4 per gallon has changed their short-term outlook for stocks. The majority of respondents said it has not. A minority, however, said they have become more bearish on stock prices.

Here is a sampling of the responses:

• "I think the relationship between the price of gas and stock prices is overblown. Gas is just one of many metrics affecting sentiment."
• "It has not affected my sentiment. I am carefully watching earnings reports and cash flows."
• "The short-term price of gas will just add some minor volatility to a market driven by other, more serious issues."
• "No change. I feel the price hike is temporary."
• "The rising price of gasoline is eating into discretionary spending for many."
• "At some point, the expenses for fuel will affect the purchase of other items."

This week's AAII Sentiment Survey Results:

• Bullish: 31.2%, up 3.0 percentage points
• Neutral: 35.0%, up 4.7 percentage points
• Bearish: 33.8%, down 7.7 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> April 12, 2012

Bearish sentiment surged from being below average to an unusually high level in the latest AAII Sentiment Survey. Meanwhile, bullish sentiment plunged to a seven-month low.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 10.0 percentage points to 28.1%. This is the lowest level of optimism registered by our survey since September 22, 2011. The historical average for bullish sentiment is 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, fell 3.7 percentage points to 30.3%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, surged 13.8 percentage points to 41.6%. This is the highest level of pessimism registered by our survey since October 6, 2011. It also the first time bearish sentiment has been above its historical average of 30% since December 29, 2011.

The difference between bullish and bearish sentiment, the bull-bear spread, fell to -13.5 percentage points. This ended a 14-week streak of positive double-digit differentials, the longest such streak since March 2004. It is also the first negative double-digit spread since last October.

Though there have been underlying concerns about the pace of economic growth, the disappointing March jobs data appears to have brought these worries to the surface. Adding to individual investors' nervousness are the ongoing European sovereign debt crisis, rising gasoline prices, concerns that the market's rally may be losing steam and uncertainty about China's economy.

At current levels, bearish sentiment is unusually high (one standard deviation above average), but not at levels that we would consider to be a contrarian signal. It may be worth noting that bearish sentiment stayed above 40% for most of last August and September.

This week's special question asked AAII members what their expectations for first-quarter earnings were. Responses were mixed, though the majority anticipated companies would report higher profits. Some respondents thought earnings would be flat relative to the fourth quarter. Others were bracing for either below-forecast earnings or a decline in profits.

Here is a sampling of the responses:

• "Most companies will meet or exceed analyst expectations."
• "First-quarter earnings will be up slightly from the fourth quarter; they will also be positive for most companies."
• "I'm expecting earnings will be slightly up for most companies. Any major surprises and the market will head down."
• "Not as strong as in the recent past, but still positive."
• "Lower than expectations in most cases and throughout most industries."

This week's AAII Sentiment Survey results:

• Bullish: 28.1%, down 10.0 percentage points
• Neutral: 30.3%, down 3.7 percentage points
• Bearish: 41.6%, up 13.8 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> April 5, 2012

Bullish sentiment is below its historical average for the first time in 15 weeks, according to the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 4.3 percentage points to 38.2%. This is the lowest level of optimism recorded in the survey since December 22, 2012. It is also just the second time in the past 17 weeks that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rose 2.0 percentage points to 34.0%. This matches the 2012 high set on January 5. It is also the second consecutive week that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.3 percentage points to 27.8%. This is the 14th consecutive week and the 15th out of the last 16 weeks that bearish sentiment has been below its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, narrowed to 10.4 percentage points. This extends the streak of positive double-digit differentials to 14 weeks, the longest such streak since March 2004. The bull-bear spread stayed in positive double digits for 35 consecutive weeks between July 2003 and March 2004.

A combination of rising gasoline prices, worries about the European sovereign debt crisis, uncertainty about China's economy and concerns that the market's rally may be losing steam helped to reduce the level of optimism recorded in our survey. Notably, bearish sentiment has stayed fairly stable over the past four weeks, with readings of 27.2% (March 15), 27.8% (March 22), 25.5% (March 29), and now 27.8%. Continued signs of economic growth in the U.S. and the stock markets performance are giving many investors reasons to stay optimistic.

This week's special question asked AAII members if there are any catalysts they are looking for over the next several months. Responses varied, though the health and direction of the U.S. economy was cited most often. Several members said they were looking for changes in employment, housing, gasoline prices or interest rates. Other potential catalysts included a worsening of the European sovereign debt problems, a slowdown in China's economy and first-quarter earnings for U.S. companies.

This week's AAII Sentiment Survey results:

• Bullish: 38.2%; down 4.3 percentage points
• Neutral: 34.0%; up 2.0 percentage points
• Bearish: 27.8%; up 2.3 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> March 29, 2012

Bearish sentiment fell to a seven-week low, while bullish sentiment stayed above average for the 15th time in the past 16 weeks in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 0.1 percentage points to 42.5%. This is the 14th consecutive week and the 15th out of the last 16 weeks that bullish sentiment has been above its historical average of 39%. This is the longest streak that bullish sentiment has been above its historical average since the period of September 9, 2010 to February 17, 2011, when optimism stayed above average for 24 consecutive weeks.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, rose 2.2 percentage points to 32.0%. This is an nine-week high and puts neutral sentiment above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 2.3 percentage points to 25.5%, a seven-week low. This is also the 13th consecutive week and the 14th out of the last 15 weeks that bearish sentiment has been below its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, is at 17.0 percentage points. This is the 13th consecutive week that the bull-bear spread has shown a positive double-digit differential, tying with streaks recorded in 2004 and in 2005. The bull-bear spread stayed in positive double digits for 35 consecutive weeks between July 2003 and March 2004.

Driving the optimism about the short-term direction of stock prices are continued signs of an improving economy and the market's strong first-quarter performance. Tempering this optimism are concerns about the slow pace of economic growth, rising gas prices, and Europe's sovereign debt problems.

This week's special question asked AAII members how often they buy or sell when their sentiment about the short-term direction of stock prices changes. The overwhelming majority of respondents said they do not buy or sell stocks based on changes in their short-term sentiment.

Here is a sampling of the responses:

• "I rarely sell on short-term direction, but I will buy if a good stock becomes a bargain."
• "Never, if the only reason is the short-term direction of stock prices."
• "Rarely; it's difficult to outguess the market."
• "Short-term direction has no effect on my buying or selling, as I am looking long-term. However, if the short-term market is down, I am more likely to buy."
• "I trade based on the expectations for a particular stock, not on short-term market direction."
• "It depends on what is else happening in the world and how that affects stocks."

This week's AAII Sentiment Survey results:

• Bullish: 42.5%, up 0.1 percentage points
• Neutral: 32.0%, up 2.2 percentage points
• Bearish: 25.5%, down 2.3 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> March 22, 2012

Bullish sentiment declined, while bearish sentiment rose slightly in the latest AAII Sentiment Survey. The spread between bullish and bearish sentiment stayed in positive double digits for the 12th consecutive week, the longest such streak since 2005.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 3.2 percentage points to 42.4%. This is the 13th consecutive week and the 14th out of the last 15 weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.6 percentage points to 29.8%. This is a five-week high. Despite the increase, neutral sentiment is below its historical average of 31% for the seventh consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.6 percentage points to 27.8%. This is the 12th consecutive week and the 13th out of the last 14 weeks that bearish sentiment has been below its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, is at 14.6 percentage points. This is the second-narrowest spread of 2012, but also the 12th consecutive week that it has shown a positive, double-digit differential. The bull-bear spread stayed in positive double digits for 13 consecutive weeks between May 19, 2005 and August 11, 2005.

Continued signs of an improving economy and rising stock prices are giving AAII members reasons to stay optimistic about the short-term outlook for stock prices. Tempering this optimism are concerns about the slow pace of economic growth, rising gas prices, and Europe's sovereign debt problems.

This week's special question asked AAII members if they thought the stock market was presently fairly valued, or if they though the stock market was undervalued or overvalued. Respondents were evenly split between those who thought stocks were undervalued and those who thought stocks were overvalued. A smaller number said stocks were fairly valued. Those who thought the market was undervalued cited projected earnings growth and the overhang of the last recession as their rationale. Those who thought the market was overvalued cited high corporate profit margins, gas prices and the economy as their rationale.

This week's AAII Sentiment Survey results:

• Bullish: 42.4%, down 3.2 percentage points
• Neutral: 29.8%, up 2.6 percentage points
• Bearish: 27.8%, up 0.6 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> March 15, 2012

Bullish sentiment rose to a five-week high as bearish sentiment declined in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stocks prices will rise over the next six months, increased by 3.2 percentage points to 45.6%. This is the highest level of optimism since February 9, 2012. It is also the 12th consecutive week and the 13th out of the last 14 weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will fall over the next six months, declined 1.4 percentage points to 27.2%. This is a 13-week low. It is also the sixth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.8 percentage points to 27.2%. This is the 11th consecutive week and the 12th out of the last 13 weeks that bearish sentiment has been below its historical average of 30%.

The difference between bullish and bearish sentiment, the bull-bear spread, is 18.4 percentage points. This the 11th consecutive week that the bull-bear spread has shown a positive, double-digit differential, the longest such streak since May-August 2005.

Continued signs of an improving economy and rising stock prices are giving AAII members reasons to stay optimistic about the short-term outlook for stock prices. Tempering this optimism are concerns about the slow pace of economic growth, rising gas prices, and Europe's sovereign debt problems.

This week's special question asked AAII members how much progress they thought was being made in resolving the European sovereign debt crisis. The majority of respondents thought the European Union was simply buying time instead of making true progress. A notable minority of respondents thought real progress on a solution was being made, however.

Here is a sampling of the responses:

• "Enough progress has been made to kick the can down the road for a while longer, but not enough to prevent an eventual meltdown."
• "Not much progress. I think that the day of reckoning is just being put off."
• "Very little, because they are continuing to kick the can down the road, instead of just dealing with the problem."
• "No long-term progress; just delaying the inevitable."
• "Progress is being made—and slow and ugly it is."

This week's AAII Sentiment Survey results:

• Bullish: 45.6%, up 3.2 percentage points
• Neutral: 27.2%, down 1.4 percentage points
• Bearish: 27.2%, down 1.8 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> March 8, 2012

Bullish sentiment fell to a 10-week low but remained above its historical average even as bearish sentiment reached a 2012 high in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.1 percentage points to 42.4%. This is lowest level of optimism since December 29, 2011. Nonetheless, bullish sentiment is above its historical average of 39% for the 11th consecutive week and the 12th out of the last 13 weeks.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, slipped 0.1 percentage points to 28.6%. This is the fifth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 2.2 percentage points to 29.0%. This is the highest level of pessimism since December 29, 2011. Even with the increase, bearish sentiment is below its historical average of 30% for the 10th consecutive week and the 11th out of the last 12 weeks.

Individual investor sentiment continues to be optimistic, even though bearish sentiment has risen during the three out of the past four weeks. Rising gasoline prices and a return of volatility to the markets on Tuesday intensified some of the underlying worries about the pace of economic growth and Europe's sovereign debt problems. Even so, many individual investors remain more focused on signs that the economy is improving and the overall gains stocks have realized since last November.

This week's special question asked AAII members if their 6 to 12 month outlook for U.S. economic growth has changed since last fall. Respondents were evenly split between those said they are now more optimistic about the economy and those who said their outlooks have not changed.

Here is a sampling of the responses:

• "I am more positive as economic indicators have improved."
• "I do not believe the economic outlook has changed since last fall. We continue to limp along with high unemployment."
• "No change in my outlook; I still expect slow growth with an increasing risk of inflation."
• "I'm somewhat more optimistic for the U.S. economy, but there are too many outside influences (China, Iran, Europe, etc.) that could have a negative affect."
• "Yes, for the better, though I expect that this improvement will not favor all industries and sectors the same."

This week's AAII Sentiment Survey Results

• Bullish: 42.4%, down 2.1 percentage points
• Neutral: 28.6%, down 0.1 percentage points
• Bearish: 29.0%, up 2.2 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> March 1, 2012

Bullish sentiment edged up slightly and bearish sentiment declined slightly in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.8 percentage points to 44.5%. This is the 10th consecutive week and the 11th out of the last 12 that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 0.1 percentage points to 28.7%. This is the fourth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 0.7 percentage points to 26.8%. This is the ninth consecutive week and the 10th out of the last 11 that bearish sentiment has been below its historical average of 30%.

This is the longest streak of above-average bullish sentiment since 2011, when optimism stayed above average for 24 weeks between September 9, 2010 and February 17, 2011. The S&P 500 increased by approximately 22% over that period.

Individual investor optimism continues to be aided by signs of improving economic conditions, as well as rising stock prices. Europe's sovereign debt problems, slow economic growth, Washington politics and rising gasoline prices are keeping bullish sentiment from being extraordinarily high.

This week's special question asked AAII members if the rise in oil prices is currently affecting their sentiment or if there is a price where it would do so. The majority of respondents said that oil prices would impact their sentiment if prices kept rising. Specifically, many respondents said oil above $120 per barrel or gasoline above $4 a gallon would be a cause for concern.

Here is a sampling of the responses:

• "Not yet. Gas prices over $3.85 a gallon would change my opinion."
• "Yes, if higher oil prices result in an average cost of gasoline increasing to over $4.50 a gallon."
• "The current price is not impacting my sentiment. If oil reached $125 per barrel, it would make me even more bearish."
• "The prediction of $5 per gallon of gasoline by summer does impact my sentiment."
• "Yes. Every dollar that goes into the tank is not spent, saved or invested elsewhere. It is equivalent to a huge tax hike, greatly affecting those who least can afford it."

This week's AAII Sentiment Survey results:

• Bullish: 44.5%, up 0.8 percentage points
• Neutral: 28.7%, down 0.1 percentage points
• Bearish: 26.8%, down 0.7 percentage points

Historical averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> February 23, 2012

Both bullish and bearish sentiment showed small increases in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.0 percentage points to 43.7%. This is the ninth consecutive week and the 10th out of the last 11 weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, fell 1.9 percentage points to 28.8%. This is the third consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.9 percentage points to 27.5%. This is the third time in four weeks that pessimism has been above 25%. Nonetheless, bearish sentiment remains below its historical average of 30% for the eighth consecutive week and the ninth out of the last 10 weeks.

Though bearish sentiment is at now at an eight-week high, individual investors in aggregate expect stock prices to move higher over the short-term. Signs of an improving U.S. economy are overshadowing worries about contagion from the European sovereign debt problems.

This week's special question asked AAII members for their thoughts about the low levels of volatility the market has been experiencing and how it is impacting their sentiment toward stocks. Responses varied. Some respondents viewed the low volatility as a sign that stock prices will continue rising, while others worried that it is a warning sign of forthcoming pullback. Some respondents said it is indicative of many investors staying on the sidelines.

Here is a sampling of the responses:

• "Low volatility tends to reduce risk and fear, which encourages more money to come into the markets."
• "Low levels of volatility are frequently a characteristic of market tops, as complacency overwhelms greed."
• "It seems that stock prices have tuned out the news headlines lately, especially those having to do with Europe. It's a much tamer market, and I like it."
• "Volumes traded are more modest, which may be a reason for the lower volatility."
• "Low volatility is okay with me. I depend on dividends, not capital gains."

This week's AAII Sentiment Survey Results:

• Bullish: 43.7%, up 1.0 percentage points
• Neutral: 28.8%, down 1.9 percentage points
• Bearish: 27.5%, up 0.9 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> Results and analysis from the weekly AAII Sentiment Survey. http://www.aaii.com February 16, 2012

Bearish sentiment rebounded to its highest level since December 29, 2011 in the latest AAII Sentiment Survey. Bullish sentiment remains above its historical average, however.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 8.9 percentage points to 42.7%. This is a seven-week low for optimism. Even with the drop, bullish sentiment stayed above its historical average of 39% for the eighth consecutive week and the ninth out of the last 10 weeks.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rose 2.5 percentage points to 30.7%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded to 26.6%, a rise of 6.4 percentage points. This is a seven-week high for pessimism. Even with the increase, bearish sentiment remains below its historical average of 30% for the seventh consecutive week, and the eighth out of the last nine weeks.

A shift in attention back to Greece's fiscal problems has caused some individual investors to become less optimistic about the six-month direction of stock prices. It is also likely that the downward drift in the markets is having an impact, though some of the shift simply reflects a reversion back toward the historical averages registered by the survey.

Even with the increase in bearish sentiment, improving U.S. economic conditions are causing many individual investors to be hopeful that stock prices will rise over the next six months. Bullish sentiment remains above 40%, as it has throughout all of 2011 so far.

This week's special question asked AAII members which industries or sectors they like right now. Energy and technology tied as the preferred sectors. Several members expressed interest in real estate, either real estate investment trusts (REITs) or home building stocks. Many members also said they favor health care and pharmaceutical stocks. When the same question was asked last November, members favored energy and technology stocks, followed by health care and utility stocks.

This week's AAII Sentiment Survey results:

• Bullish: 42.7%; down 8.9 percentage points
• Neutral: 30.7%; up 2.5 percentage points
• Bearish: 26.6%; up 6.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> February 9, 2012

Bullish sentiment jumped to its highest level since January 13, 2011, in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, reached 51.6%. The 7.8-percentage-point increase drove optimism to an unusually high level, but not an extraordinarily high level. Bullish sentiment is now above its historical average of 39% for eight out of the past nine weeks.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, declined 2.9 percentage points to 28.2%. This is just the second time in six weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 4.9 percentage points to 20.2%. This the seventh time in the past eight weeks that bearish sentiment has been below its historical average of 30%.

Bullish sentiment is now more than one standard deviation above its historical average, placing it above the typical range that has been registered over the course of the survey. The difference between bullish and bearish sentiment (the bull-bear spread) is also unusually high at 31.5%, but not so high as to create caution that individual investors are too optimistic.

Driving the bullish sentiment is the belief that both the economy and corporate earnings are improving. Europe's sovereign debt problems and slow domestic economic growth still concern many individual investors, however.

This week's special question asked AAII members for their thoughts on Facebook's initial public offering (IPO) and whether they will consider buying shares of the stock. The overwhelming majority of respondents said they wouldn't invest in Facebook, especially during or right after the IPO. Many think there is already too much excitement for the offering. Others were worried that the company is a fad or said that they didn't fully understand the industry.

Here is a sampling of the responses:

• "I will pass. When so many people are excited, the best thing to do is turn away."
• "Many are buying shares on the basis of pure speculation. At a P/E of 150, the prudent investor would wait."
• "The IPO will be in great demand, so I would expect the initial trading to be characterized by irrational exuberance."
• "I wouldn't touch that IPO with a ten-foot pole."
• "I will buy it. It's Google (GOOG) all over, with no one knowing how they'll make money yet the company will continue to grow."

This week's AAII Sentiment Survey results:

• Bullish: 51.6%, up 7.8 percentage points
• Neutral: 28.2%, down 2.9 percentage points
• Bearish: 20.2%, down 4.9 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> February 2, 2012

Bullish sentiment remained above its historical average, while bearish sentiment rebounded to a five-week high in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell to 43.8%, a 4.6 percentage-point decline. Despite the pullback, optimism is above its historical average for the sixth consecutive week and the seventh out of the past eight weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, slipped 1.6 percentage points to 31.1%. Nonetheless, neutral sentiment is above its historical average of 31% for the fifth time in seven weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 6.2 percentage points to 25.1%. This is the highest level of pessimism since December 29, 2011. Even with the increase, bearish sentiment remains below its historical average of 30% for the sixth time in seven weeks.

Though the level of optimism declined in this week's survey, individual investors continue to remain hopeful about the six-month direction of stock prices. Since bearish sentiment had been at unusually low levels and AAII members are concerned about Europe's sovereign debt problems, a rebound in bearish sentiment is not surprising.

This week's special question asked AAII members what impact, if any, the Federal Reserve's decision to leave interest rates unchanged until at least 2014 had on their six-month outlook for stocks. The majority of respondents said it made them more bullish, particularly towards dividend-paying stocks. Those who said the Fed's decision had no impact or a negative impact on their sentiment thought the news was already priced in, said Europe was a bigger issue, or expressed concerned about future inflationary pressures.

Here is a sampling of the responses:

• "It reinforced my decision to have quality, global, superior dividend-paying stocks and ADRs make up the majority of my portfolio."
• "The extension of very low interest rates encourages me to seek dividend-paying stocks."
• "I'm slightly more positive, but this action pales in potential impact when compared to the ongoing soap opera in Europe."
• "No impact. The announcement wasn't too surprising."
• "I think they are out of their minds."

This week's Sentiment Survey results:

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 26, 2012

Bullish sentiment stayed near 50% for the fourth consecutive week in the latest AAII Sentiment Survey. Bearish sentiment is unusually low for the third time in four weeks.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded to 48.4%, an increase of 1.2 percentage points. This is the sixth time in seven weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rebounded by 3.5 percentage points to 32.7%. This is the fourth time in six weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell to 18.9%, a decrease of 4.7 percentage points. At more than one standard deviation below average, readings at this level are outside of the typical range for bearish sentiment we have seen over the survey's history. The historical average is 30%.

AAII members continue to remain optimistic about the short-term direction of stock prices. Though bullish sentiment is high, it is still within the range of optimism typically registered in the survey. A bullish sentiment reading above 50% would be considered unusually high, and a reading above 60% would be extraordinarily high, potentially signaling too much exuberance.

This week's special question asked AAII members what factors are causing them to be bullish, neutral or bearish. Respondents credited signs of an improving economy followed by better corporate earnings as the primary reasons for their optimism. Bearish respondents most frequently cited Europe's sovereign debt problems, followed by the economy, the federal deficit and Washington politics.

Here is a sampling of the responses:

• "The economic indicators are getting better; there is no choice but to turn bullish."
• "I'm bullish because of rising employment, the improving housing market and better corporate earnings."
• "The situation in Europe remains a overhang on the market."
• "Europe's problems and congressional infighting are going to keep the market in negative territory over the next six months."
• "With the elections in the U.S. and the problems in Europe, I think the ups and downs will even out."
• "We are at resistance and I don't think the current global economic conditions will let the market go up much more."

This week's AAII Sentiment Survey results:

• Bullish: 48.4%, up 1.2 percentage points
• Neutral: 32.7%, up 3.5 percentage points
• Bearish: 18.9%, down 4.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 19, 2012

Bullish sentiment is above average for the fourth consecutive week, while bearish sentiment rebounded in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 1.9 percentage points to 47.2%. Even with the drop, bullish sentiment is above its historical average of 39% for the fourth consecutive week and the 10th time out of the last 15 weeks.

Neutral sentiment, expectations that stock prices will remain essentially flat over the next six months, fell 4.5 percentage points to 29.2%. This is the first time in three weeks that neutral sentiment is below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 6.4 percentage points to 23.6%. Although this is a three-week high, pessimism is below its historical average of 30% for the fourth time in the past five weeks.

Sentiment remains upbeat, as individual investors are hopeful about the short-term direction of prices. Even though many are optimistic, individual investors still remain concerned about the pace of economic growth, Washington politics and the European sovereign debt crisis.

This week's special question asked AAII members if they are taking on more risk (investing more aggressively), less risk (investing more conservatively) or keeping their risk exposure about the same as six months ago. The largest number of respondents said they were keeping their risk exposure unchanged. Investing more conservatively and investing more aggressively ranked second and third in terms of the number of responses.

Here is a sampling of the responses:

• "About the same. I try to keep a balanced portfolio with stocks, stock funds and bonds."
• "No change. I see a lot of positives, but I still feel something big and negative will happen to counteract the positives."
• "Same, but I'm more relaxed. The market seems to have baked in the European and Congressional stalemates. It is not as skittish as it was from August forward in 2011."
• "Less risk. The market is just too erratic and scary at this time."
• "I am investing with a little more risk, as I feel that we will experience a slow but improving world economy."

This week's AAII Sentiment Survey results:

• Bullish: 47.2%, down 1.9 percentage points
• Neutral: 29.2%, down 4.5 percentage points
• Bearish: 23.6%, up 6.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 12, 2012

Bullish sentiment edged up slightly, while bearish sentiment stayed at unusually low levels in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.3 percentage points to 49.1%. This is the highest level of optimism registered by the survey since February 10, 2011, when bullish sentiment reached 49.4%. The historic average is 39%.

Neutral sentiment, expectations that stock prices will remain unchanged over the next six months, slipped 0.3 percentage points to 33.7%. Even with the decrease, neutral sentiment is above its historical average of 31% for the third time in the past four weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, was unchanged at 17.2%. Pessimism not only stayed at its lowest level since December 23, 2010, it also remained at a reading that is more than one standard deviation below the historical average of 30%.

The positive start to 2012 is keeping individual investors hopeful about the short-term direction of stock prices. The survey results also continue to reflect an overall improvement in moods with bullish sentiment now above its historical average for nine out of the last 14 weeks. Even with the improvement in sentiment, individual investors still remain concerned about the pace of economic growth, Washington politics and the European sovereign debt crisis.

This week's AAII Sentiment Survey results:

• Bullish: 49.1%, up 0.3 percentage points
• Neutral: 33.7%, down 0.3 percentage points
• Bearish: 17.2%, unchanged

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> January 5, 2012

Bullish sentiment soared to an 11-month high in the latest AAII Sentiment Survey. Bearish sentiment plunged to levels not seen since December 2010.

Bullish sentiment, expectations that stock prices will rise over the next six months, jumped 8.3 percentage points to 48.9%. This is the highest level of optimism since February 10, 2011. It is also the third time in the past four weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, rose 5.4 percentage points to 34.0%. This is the second time in three weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 13.7 percentage points to 17.2%. This is the lowest level of pessimism since December 23, 2010. It is also more than one standard deviation below the historical average of 30%, making this an unusually low reading.

AAII members are starting the new year with optimism about the short-term direction of stock prices. Whether this positive outlook holds remains to be seen, as many individual investors are concerned about the slow pace of economic growth, Washington politics and the European sovereign debt crisis. There has been a gradual improvement in individual investors' outlook, however, with bullish sentiment posting above-average readings during eight out of the past 13 weeks, after having stayed at below average levels for 27 out 33 weeks.

This week's special question asked AAII members whether large-cap, mid-cap, small-cap or micro-cap stocks will perform best this year. The majority of respondents said large-cap stocks, especially those that pay dividends, will deliver the best returns. Mid-cap stocks were a distant second, followed by small-cap stocks.

Here is a sampling of the responses:

• "We're in a negative environment where investors feel more comfortable in bigger companies with stability. Those stocks that pay dividends will be in favor."
• "Large-cap stocks due to their global reach and dividends; people view them as safe."
• "Large-cap stocks. Dividends and safety matter. Exposure to emerging markets can be attained through high-quality large-cap stocks."
• "Mid-cap stocks. They have better growth than small caps since they have more access to capital. Large caps still need the global economy to be more robust."
• "Small- and micro-cap stocks, because they are the most undervalued and usually lead the market in an economic recovery."

This week's AAII Sentiment Survey results:

• Bullish: 48.9%, up 8.3 percentage points
• Neutral: 34.0%, up 5.4 percentage points
• Bearish: 17.2%, down 13.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 29, 2011

A Santa Claus rally helped to lift individual investor sentiment from a neutral stance to a predominately bullish stance in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 6.9 percentage points to 40.6%. This is a six-week high for bullish sentiment and is above the historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, fell 9.4 percentage points to 28.6%. Neutral sentiment hit a six-year high last week, and this week's large decline pushed the neutral sentiment reading back below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, increased slightly by 2.6 percentage points to 30.8%. Bearish sentiment has been above its historical average of 30% six times over the last seven weeks.

Many individual investors are encouraged by the improving domestic economic picture, but remain cautious and concerned about the European sovereign debt problems.

This week's special question asked AAII members if there were any economic or market-related catalysts they might be looking for over the next few months. Most respondents focused on Europe, with bullish investors looking toward a stabilization or semi-resolution of the eurozone debt problems as positive catalysts, while bearish investors expect a breakup of the European Common Market that will hurt the domestic economy and the markets. On the domestic front, a number of respondents cited an improving domestic employment picture, strong consumer spending and an improving housing market as key economic catalysts.

Here is a sampling of the responses:

• "I am looking for the breakup of the European Common Market, which will affect our economy in a negative way."
• "I think that for the next few months, news from Europe will continue to move the markets in a seesaw fashion. By comparison, important numbers like GDP and employment will have a muted effect."
• "I am looking for a slowly improving economy and a final resolution to the European debt crisis."
• "Improvements in unemployment, housing starts, existing home sales, industrial production, energy prices and exports."
• "A large increase in consumer spending."
• "An increase in domestic energy production."

This week's AAII Sentiment Survey results:

• Bullish: 40.6%, up 6.9 percentage points
• Neutral: 28.6%, down 9.4 percentage points
• Bearish: 30.8%, up 2.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 22, 2011

Neutral sentiment rose to its highest level since 2005 in the latest AAII Sentiment Survey, as both bullish and bearish sentiment fell.

Bullish sentiment, expectations that stock prices will rise over the next six months, dropped 6.5 percentage points to 33.7%. This is a four-week low. It is also the fifth time in the past six weeks that bullish sentiment has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, jumped 11.9 percentage points to 38.0%. This is the highest neutral sentiment has been since April 14, 2005. It is also just the second time in the past 22 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.4 percentage points to 28.2%. This is the first time in six weeks that bearish sentiment has been below its historical average of 30%.

Though this week's neutral sentiment reading is unusually high by recent standards, it remains within its long-term historical range. Neutral sentiment exceeded 40% at least once every year between 1989 and 2005. It has only been over the past six years that the percentage of individual investors expecting a flat market has stayed at lower levels.

Many individual investors remain cautious, and/or frustrated, due to ongoing market volatility and headline risk. European sovereign debt problems, Washington politics and slow economic growth are all weighing on sentiment.

This week's special question asked AAII members how they thought the S&P 500 will perform in 2012. Respondents expecting an up year outnumbered those expecting a down year by a margin of three to one. Expectations were modest, however, with more of than half of those predicting gains saying the S&P 500 will rise by 10% or less. (Many projected a full-year increase of 5% to 10%.) A notable number of AAII members predicted a rise between 12% and 15% or a drop of 5%. A continuation of volatility was a common theme, even among those who were looking for the stocks to ultimately rise over the course of 2012.

This week's AAII Sentiment Survey results:

• Bullish: 33.7%; down 6.5 percentage points
• Neutral: 38.0%; up 11.9 percentage points
• Bearish: 28.2%; down 5.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 15, 2011

Bullish sentiment rebounded to its first above-average reading since mid-November in the latest AAII Sentiment Survey. Bearish sentiment fell, but it continues to stay above its historical average.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 1.6 percentage points to 40.2%. This is the third consecutive weekly increase in optimism. It is also the first time since November 17, 2011 that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, declined 0.5 percentage points to 26.2%. This was the third consecutive weekly decrease. It is also the 21st time in the past 22 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.1 percentage points to 33.6%, a four-week low. Even with the decrease, bearish sentiment stayed above its historical average of 30% for the 5th consecutive week and the 37th out of the past 43 weeks.

Though there has been an improvement in bullish sentiment over the past few weeks, many investors remain cautious, and frustrated. Ongoing market volatility, slow economic growth, European sovereign debt problems and Washington politics are all continuing to fray nerves. Whether the current rise in bullish sentiment signals a turning point remains to be seen, particularly since optimism has not stayed above its historical average for a period of longer than four weeks since last February.

This week's special question asked AAII members what impact, if any, a possible extension of the payroll tax cut into 2012 would have on their six-month outlook for stocks. The majority of respondents said an extension would have no impact or just a small, though positive, impact. There were many members, however, who thought an extension would help stock prices.

Here is a sampling of the responses:

• "The payroll tax cut will have no impact on stocks."
• "None really, except that I think an extension would be helpful for consumer behavior."
• "If the tax cut is not extended, then I expect the market to decline, on expectations of lower earnings going forward."
• "An extension would be a slight positive for the market, with people having more money in their pockets to spend or pay down debt."
• "An extension would help the economy by increasing purchasing power. An improved economy should increase the value of stocks."

This week's AAII Sentiment Survey results:

• Bullish: 40.2%; up 1.6 percentage points
• Neutral: 26.2%; down 0.5 percentage points
• Bearish: 33.6%; down 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 8, 2011

Bullish sentiment rebounded in the latest AAII Sentiment Survey, but bearish sentiment stayed above average for the fourth consecutive week.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded 5.5 percentage points to 38.6%. Even with the improvement, optimism remained below its historical average of 39% for the third consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 0.9 percentage points to 26.7%. This is an eight-week low for neutral sentiment. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 4.7 percentage points to 34.8%. Even with the decrease, this is the fourth consecutive week, and the 36th out of 42, that bearish sentiment has been above its historical average of 30%.

The ongoing market volatility, combined with slow economic growth, the European sovereign debt crisis and Washington politics, continues to leave many AAII members frustrated and cautious. Improvements in optimism this year have proven to be fragile in part due to the headline-driven nature of the current market climate. It should also be noted that many individual investors have responded by becoming more conservative with their portfolio allocations, as was evident in our November Asset Allocation Survey.

This week's special question asked about last week's coordinated central bank move to provide liquidity support to Europe. Specifically, we asked if AAII members if the announcement made them more or less optimistic that the events in Europe won't negatively impact the U.S. economy. Responses were split with the largest number of respondents saying they were less optimistic.

Here is sampling of the responses:

• "Less optimistic. I have seen no evidence to date that the European leaders know what to do to reduce the effects of a debt de-leveraging cycle."
• "I'm less optimistic because such a move implies that the credit markets were very close to freezing up."
• "Neither. I think the underlying problem of too much debt remains unaddressed."
• "I'm a little more optimistic."

This week's AAII Sentiment Survey Results:

• Bullish: 38.6%, up 5.5 percentage points
• Neutral: 26.7%, down 0.9 percentage points
• Bearish: 34.8%, down 4.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> December 1, 2011

Bearish sentiment neared a two-month high in the latest AAII Sentiment Survey, while bullish sentiment remained below average.

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 0.3 percentage points to 33.0%. This is the second consecutive week that optimism has been below its historical average of 39%.

Neutral sentiment, expectations that stock prices will remain essentially unchanged over the next six months, fell 1.5 percentage points to 27.5%. This is the 19th time in the past 20 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 39.4%. This is the highest level of pessimism since October 6, 2011. This is also the third consecutive week that bearish sentiment has been above its historical average of 30%.

Due to the timing of our survey (Thursday through Wednesday), it is too early to tell if Wednesday's coordinated central bank action and the resulting rally have affected individual investor sentiment . The longer trends show a lasting cautiousness on the part of individual investors with bearish sentiment registering above-average readings for 35 out of the past 41 weeks. (The level of bearish sentiment exceeded the level of bullish sentiment 18 times during that period.) Market volatility, slow economic growth, European sovereign debt problems and Washington politics are all adversely impacting individual investors' moods.

This week's sentiment survey ask AAII members how, if at all, the congressional super committee's failure to reach a compromise on a long-term deficit reduction plan affected their sentiment towards stocks. The majority of respondents said that it didn't have an impact, though many had expected the committee to fail. A sizeable minority said the lack of compromise made them more bearish.

Here is a sampling of the responses:

• "I never figured the super committee would achieve anything, so I am just staying the course (with my investments)."
• "This was all political theater. It was never intended to reduce the deficit, so it had no change on my outlook about the direction of the market."
• "No impact. I believe the lack of any compromise coming from this special congressional committee was already priced in."
• "Definitely a negative. I can't have much faith in our economy when our government officials can't accomplish the goals mandated by to them by law."
• "Neither U.S. nor European Union 'leaders' seem capable of managing their responsibilities. I am angry at them and fearful for our economies."

This week's AAII Sentiment Survey results:

• Bullish: 33.0%, up 0.3 percentage points
• Neutral: 27.5%, down 1.5 percentage points
• Bearish: 39.4%, up 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 17, 2011

Bullish sentiment stayed above 40% for the fourth consecutive week but bearish sentiment rebounded in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, declined 2.8 percentage points, to 41.9%. Nonetheless, this was the first time optimism has stayed above 40% for four consecutive weeks since February 2011. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 3.7 percentage points to 27.0%. This is the 17th time in the past 18 weeks that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 6.5 percentage points to 31.0%. This was the first time in four weeks that pessimism has been above its historical average of 30%.

AAII members continue to be more upbeat about the six-month direction of stocks prices than they were in August and September. Optimism remains cautious, however, as is evidenced by the bullish sentiment reading. The slow level of U.S. economic growth, Europe's sovereign debt crisis, Washington politics and the market's daily volatility are combining to keep confidence at historically modest modest levels, and the nerves of some individual investors are frayed.

This week's special question asked AAII members what sectors and industries they currently like. Oil and technology tied as the favorites. Health care and utilities tied for second, followed by consumer staples. When the same question was asked in August, members said they liked energy, basic materials/commodities, health care, utilities and technology.

This week's AAII Sentiment Survey:

• Bullish: 41.9%, down 2.8 percentage points
• Neutral: 27.0%, down 3.7 percentage points
• Bearish: 31.0%, up 6.5 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 10, 2011

Bullish sentiment rebounded, while bearish sentiment fell to a level not seen since last January in the latest AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, rose 4.6 percentage points to 44.7%. This is the highest percentage of optimism since February 17, 2011. This is also the third consecutive week that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, edged up 0.5 percentage points to 30.7%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.1 percentage points to 24.6%. This is the lowest level of pessimism since January 13, 2011. Bearish sentiment has now been below its historical average for three consecutive weeks.

Many respondents took this week's survey before yesterday's 389-point drop in the Dow. Thus the results reflect optimism caused by the rebound that stock prices had been experiencing. Even with the improvement in bullish sentiment, individual investors remain cautious, however, given the events in Europe, the slow level of U.S. economic growth, and Washington politics.

In honor of this week's AAII Conference, which is being held in Las Vegas, we asked AAII members who their favorite Vegas act was (past or present). Elvis Presley and Circ de Soleil received the most votes.

This week's AAII Sentiment Survey results:

• Bullish: 44.7%, up 4.6 percentage points
• Neutral: 30.7%, up 0.5 percentage points
• Bearish: 24.6%, down 5.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> November 3, 2011

Both optimism and pessimism about the short-term direction of stock prices were near their historical averages in this week's AAII Sentiment Survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 2.8 percentage points to 40.2%. Even with the drop, this marks the third time in four weeks that bullish sentiment is above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, declined 1.8 percentage points to 30.2%. The historical average is 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded 4.6 percentage points to 29.6%. Even with the increase, pessimism stayed below its historical average of 30% for the second consecutive week.

This is the first time since July 2011 when we have had consecutive weeks of above-average bullish sentiment and below-average bearish sentiment. Though marking an improvement in attitudes to toward the market, it is important to note that both readings are very close to their historical averages. The ongoing European debt crisis, slow domestic economic growth and frustration with Washington politics are all keeping individual investors cautious.

This week's special question asked AAII members how the developments with European sovereign debt are affecting their sentiment toward stocks. The majority of respondents said that the situation in Europe was having a negative impact, that they were avoiding European stocks, or both. Several members expressed an aversion to foreign stocks, echoing comments made in last month's AAII Asset Allocation Survey. A few members, however, said they were finding opportunities in emerging market securities.

Here is a sampling of the responses:

• "European sovereign debt will incur more uncertainty and will negatively affect the U.S. and global markets, especially the European markets."
• "The problems are still not resolved in my opinion. So, I'm staying away from Europe."
• "I stay away from global stocks. I do invest in U.S. companies that have a global reach."
• "I am staying with what I currently own; I'm not taking new positions or adding to those already in the portfolio. The European Union has not dealt with Italy, Spain, Portugal or Ireland."
• "Scare stories from Europe are providing opportunities to invest in global stocks, which are cheap—especially emerging market stocks."

This week's AAII Sentiment Survey results:

• Bullish: 40.2%, down 2.8 percentage points
• Neutral: 30.2%, down 1.8 percentage points
• Bearish: 29.6%, up 4.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 27, 2011

Bullish sentiment, expectations that stock prices will rise over the next six months, reached a six-month high in the latest AAII Sentiment Survey. Optimism jumped 7.0 percentage points to 43.0%. This is the second time in three weeks that bullish sentiment has been above its historical average of 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rose 2.6 percentage points to 32.0%. This is the first time in 15 weeks that neutral sentiment has been above its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.6 percentage points to 25.0%. This is the lowest level of pessimism since July 7, 2011. Bearish sentiment had been above its historical average of 30% for the previous 14 consecutive weeks.

This week's numbers are a significant change from the trends we have been. Bullish sentiment is above average for only the fifth time out of the last 28 weeks. Bearish sentiment is below average for only the fourth time in the past 36 weeks. The spread between bullish and bearish sentiment (the bull/bear spread) is the most positive it has been since February 17, 2011.

Whether this is a distinguishing change in sentiment or just a temporary shift remains to be seen. Pessimism has declined for five consecutive weeks as October's rebound in stock prices has helped to calm nerves. On the other hand, individual investors remain concerned about the pace of economic growth, the gridlock in Washington and European sovereign debt. (This week's survey was completed before this morning’s announcement from Europe.) Thus, the optimism signal in this week's survey is a cautious optimism.

This week's special question asked AAII members whether they are looking at value, growth or dividend stocks. The overwhelming majority of respondents said they were looking at dividend stocks. Many cited the comparatively higher yields or the cushion against volatile market conditions that dividends offer. A small group expressed a preference for either growth or value stocks, and some said they were currently avoiding stocks altogether.

Here is a sampling of the responses:

• "Dividend-paying, so I can at least get paid while waiting for an upward market move."
• "Dividend-paying stocks. I am retired and looking for income. In addition, these seem to be the safest segment of the market."
• "Dividend-paying. They are better than CDs, interest on banking accounts, and many bonds."
• "I have been interested in dividend stocks for almost two years. They provide a steady source of income, even in a very unpredictable market."
• "Dividend. Yields on these stocks seem attractive."

This week's AAII Sentiment Survey results:

• Bullish: 43.0%, up 7.0 percentage points
• Neutral: 32.0%, up 2.6 percentage points
• Bearish: 25.0%, down 9.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 20, 2011

Bullish sentiment fell 3.8 percentage points to 36.0% in the latest AAII Sentiment Survey. The percentage of individual investors expecting stock prices to rise over the next six months dipped back below the historical average of 39.0%, after rising above it last week for the first time in 12 weeks. Bullish sentiment has now been below its historical average of 39% for 23 out of the last 27 weeks.

Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, jumped 5.5 percentage points to 29.4%. This is a six-week high. Even with the improvement, neutral sentiment stayed below its historical average of 31% for the 14th consecutive week.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.8 percentage points to 34.6%. This is the fourth consecutive week that pessimism has decreased. Even with the drop, bearish sentiment remained above its historical average of 30% for the 32nd time in the past 35 weeks.

AAII members have become less glum about the short-term outlook for stocks over the past few weeks. This is particularly evident in the bull-bear spread (bullish sentiment minus bearish sentiment), which is positive for the second consecutive week. Optimism is cautious, at best, as concerns about the economy, Washington and European sovereign debt weigh on individual investors' moods.

This week's special question asked AAII members if this year's holiday shopping season will be better or worse than last year's. (The National Retail Federation forecasts holiday sales will rise 2.8%.) Responses were evenly split between those who predict consumers will spend more and those who expect less holiday spending. (A smaller group thought sales would be flat.) Those who are optimistic cited pent-up demand, greater confidence among those who have jobs and the recent returns charted by retail stocks. Those who are pessimistic cite high unemployment, economic uncertainty and rising living costs.

Here is a sampling of the responses.

• "More holiday spending. If you have a job, life isn't bad and people held back during the last two years."
• "More spending. I was in a major toy retailer's store this past week and was surprised by the high level of activity."
• "Consumers will spend less because of the weak economy."
• "With so many people unemployed and living expenses that have increased, I can't see money being spent that people don't have."
• "Since incomes are stagnant for those who have jobs, I think holiday sales will be about the same as last year."

This week's AAII Sentiment Survey results:

• Bullish: 36.0%, down 3.8 percentage points
• Neutral: 29.4%, up 5.5 percentage points
• Bearish: 34.6%, down 1.8 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 13, 2011

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 4.5 percentage points to 39.8%. This is the highest level of optimism since July 21, 2011. It also ends a streak of 11 weeks when bullish sentiment was below its historical average of 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, rose 4.8 percentage points to 23.9%. This was the 13th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, plunged 9.4 percentage points to 36.4%. This is a six-week low for pessimism. It is also only the third time in the past 11 weeks that bearish sentiment has been below 40%. Despite this week's decrease, pessimism is above its historical average of 30% for the 31st time out of the last 34 weeks.

The Dow Jones Industrial Average has jumped 8% higher from its October 3 close, and this rebound has alleviated some of the pessimism. Though a greater percentage of investors are looking for stocks to rise over the next six months, AAII members remain very cautious, as is evident by the above-average level of bearish sentiment. The pace of economic growth, worries about European sovereign debt, frustration with Washington and volatile market conditions are weighing on individual investors' moods.

This week's special question asked AAII members if they have recently begun bargain shopping for stocks. The majority of respondents said they had not. Several, however, said they would consider bargain shopping if prices fell by an additional 10% to 20%. Others were either waiting on factors beside price movement or simply had no intentions of buying stocks right now. A sizeable minority, however, said they have recently been bargain shopping for stocks.

Here is a sampling of the responses:

• "No. Nothing has been resolved in Europe, and I expect lower guidance from U.S. companies."
• "I am not bargain hunting because the market will be down a lot in six months."
• "I am looking, but I will not be buying without another drop of 5% to 15%."
• "I have a cash position of more than 20% and will invest in stocks when they drop 10% from current levels."
• "No hunting yet, but I will soon be scouting the grounds for trophy picks."
• "I started in July and have been buying stocks ever since then."

This week's AAII Sentiment Survey results:

• Bullish: 39.8%, up 4.5 percentage points
• Neutral: 23.9%, up 4.8 percentage points
• Bearish: 36.4%, down 9.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> October 6, 2011

Bullish sentiment rebounded to a five-week high in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months rose 2.7 percentage points to 35.2%. Even with the improvement, bullish sentiment remained below its historical average of 39% for the 11th consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially flat, fell 1.6 percentage points to 19.0%. This is the lowest level of neutral sentiment since November 11, 2010.

Bearish sentiment, expectations that stock prices will fall over the next six months, declined 1.1 percentage points to 45.7%. This was the eighth time in the past 10 weeks that bearish sentiment has been above 40%. It is also the 30th time out of the last 33 weeks that bearish sentiment has been above its historical average of 30%.

Individual investors continue to fret about the direction of stock prices. Concerns about the pace of economic growth, worries about European sovereign debt, frustration with Washington and volatile market conditions are combining to keep bearish sentiment at historically high levels.

This week's special question asked AAII members where they foresee the U.S. economy headed over the next six months. The majority of respondents thought the economy would expand, albeit at a slow pace. A minority are expecting the U.S. to fall into a double-dip recession, while a few believe the pace of economic expansion will accelerate.

Here is a sampling of the responses:

• "I expect continued slow growth until the fiscal uncertainties are clarified."
• "I suspect no growth on average, with minor ups and downs while the Congressional deadlock continues."
• "Slow growth that could morph into a double-dip recession if the European situation is not resolved."
• "I think we will have continued slow growth while Washington dithers."
• "Definitely slow to no growth, with a double-dip recession coming."

This week's AAII Sentiment Survey results:

• Bullish: 35.2%, up 2.7 percentage points
• Neutral: 19.0%, down 1.6 percentage points
• Bearish: 45.7%, down 1.1 percentage points

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 29, 2011

Investor sentiment continues to be to be bearish on the outlook of the market six months out, but a higher percentage of investors are bullish this week in the latest AAII Sentiment Survey. Bullish sentiment among individual investors increased 7.2 percentage points to 32.5%. The increase was the highest single-week jump in the bullish reading since the middle of June. The weekly sentiment reading of investors expecting stock prices to rise over the next six months continues to be below its long-term average of 39%. Bullish sentiment has measured below its historical average for 10 consecutive weeks.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 6.0 percentage points to 20.7%. This is the 11th consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 1.2 percentage points to 46.8%. This was the seventh time in the past nine weeks that bearish sentiment has been above 40%. It is also the 29th time out of the last 32 weeks that bearish sentiment has been above its historical average of 30%. While bearish sentiment declined, it remains more than one standard deviation above its long-term average.

This week's AAII Sentiment Survey results:

• Bullish: 32.5%, up 7.2 percentage points
• Neutral: 20.7%, down 6.0 percentage points
• Bearish: 46.8%, down 1.2 percentage points

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 22. 2011

Investor sentiment continued its pessimistic slide in the latest AAII survey of individual investors. Bullish sentiment decreased 5.2 percentage points to 25.3%. The percentage of investors expecting stock prices to rise over the next six months is 13.7 percentage points below the long-term historical average of 39%. Bullish sentiment has been below its historical average for nine consecutive weeks and has been below the historical average 20 times over the last 23 weeks.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 1.5 percentage points to 26.7%. This is the tenth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 6.7 percentage points to 48.0%. This was the sixth time in the past eight weeks that bearish sentiment has been above 40%. It is also the 28th time in the last 31 weeks that bearish sentiment has been above its historical average of 30%.

The numbers show growing pessimism among individual investors. Both bearish and bullish sentiment readings are more than one standard deviation away from their long-term averages. Bearish sentiment is more than one standard deviation above its average of 30%, while bullish sentiment is more than one standard deviation below its 39% long-term average.

This week's special question asked AAII members if the Greek sovereign debt situation was influencing their investing decisions. Specifically, we asked if members had taken any investment actions because of the Greek debt situation, whether they were waiting to see if the country defaults or looking for bargains in European stocks. The responses varied widely, with some respondents expecting a successful resolution to the Greek debt crisis and others anticipating a Greek default. Some investors are using the pessimistic environment to snap up bargains, while others are holding more cash and bonds than usual until there is a true resolution to the Greek debt crisis. Most respondents seem to be monitoring the situation without letting it impact their investment decisions.

Here is a sampling of the responses to this week's special question.

• "I am monitoring the Greek situation, but it is not affecting my decisions at this point."
• "It's just the tip of the iceberg in Europe. The situation in Europe could blow up and make the market collapse of 2008 look small by comparison."
• "Europe has deep-seated structural problems well beyond Greece. I am not buying European stocks."
• "Who wants to catch the falling European knife?"
• "I am looking for more bargains in U.S. stocks that are just down because of the European uncertainty."
• "Looking for bargains in European stocks. Greece is going to default sooner or later. But not all European companies should be painted with the same brush."
• "Greece? Wasn't that a Movie Title?"

This week's AAII Sentiment Survey results:

• Bullish: 25.3%, down 5.2 percentage points
• Neutral: 26.7%, down 1.5 percentage points
• Bearish: 48.0%, up 6.7 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 15. 2011

Bullish sentiment increased 0.3 percentage points to 30.5% in the latest AAII Sentiment Survey. The slight change kept optimism that stock prices will rise over the next six months below its historical average of 39% for the eighth consecutive week. This was also the 19th time in 22 weeks that optimism has been below average.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 1.3 percentage points to 28.2%. This is the ninth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 1.1 percentage points to 41.3%. This was the fifth time in the past nine weeks that bearish sentiment has been above 40%. It is also the 27th time out of the last 30 weeks that bearish sentiment has been above its historical average of 30%.

The numbers show continued pessimism on the part of individual investors. Bearish sentiment is back to being more than one standard deviation above average, making it unusually high, but not extraordinarily so. Bullish sentiment, though below average, is not yet at levels that would make it usually low, however.

The pessimism is a continued reaction to the negative headlines. Individual investors are concerned about the volatility in stock prices, the slow pace of economic growth, sovereign debt concerns (both in the U.S. and in Europe) and Washington politics.

This week's special question asked AAII members about their longer-term outlook for stocks. Specifically, we asked whether stocks had more potential upside or downside over the next 12 to 24 months. The majority of respondents thought stocks had more potential upside, though a sizeable minority anticipated more downside. Many predicted continued volatility, even those who anticipated stocks to show gains or losses.

Several members pointed to next year's presidential election as a potential catalyst. (How the election results will affect stocks depended on the member's political bias.) Other members thought cited the level of fear about the U.S. economy and European sovereign debt, overseas profit growth, sovereign debt problems (including U.S. debt) and the economy as factors affecting their outlook.

When we asked the same question last April, the responses were divided, with slightly more AAII members anticipating a further rise in stocks prices over the next 12 to 24 months than those who thought stock prices will fall.

Here is a sampling of the responses to this week's special question.

• "I don't think the world is going to end, so I expect more upside than downside despite mediocre to little growth in developed markets."
• "It does seem that, longer term, stocks are cheap. If another full-blown recession can be avoided, stocks should be higher in the long term."
• "I expect generally more upside, but there are so many events that will steer the market sharply down."
• "More volatility ahead. I anticipate spurts, both up and down."
• "More downside. European and U.S. debt problems combined with the inability to tackle financial commitments will weigh economic opportunity down."
• "The longer-term prognosis will depend on the 2012 election."

This week's AAII Sentiment Survey results:

• Bullish: 30.5%, up 0.3 percentage points
• Neutral: 28.2%, down 1.3 percentage points
• Bearish: 41.3%, up 1.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 8. 2011

Individual investor sentiment turned bearish after the holiday weekend. Bullish sentiment declined 8.4 percentage points over the last week. The percentage of individual investors who expect stock prices to rise over the next six months measured 30.2% this week, reversing a four-week trend of steady weekly increases in bullish sentiment. Bullish sentiment is now 8.8 percentage points below its historical average of 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, increased 0.5 percentage points to 29.5%. Neutral sentiment has been below its historical average of 31% for eight consecutive weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, climbed by 8.0 percentage points to 40.3%. Bearish sentiment has been above its historical average of 30% for eight straight weeks, and it has been above its historical average for 26 out of the last 29 weekly readings.

All of the sentiment readings are now within a few percentage points of their long-term averages.

This week's special question asked AAII members if there are any economic or market-related catalysts they are looking for over the next few months. Many respondents discussed the need for improvement in the employment environment, but said they were frustrated by gridlock and partisan politics in Washington. Investors expressed some hope that the Fed will help strengthen the U.S. economy if it continues to weaken, while stating that European central banks need to work to resolve the financial crisis abroad. A few respondents expressed little hope, and stated that they expect a collapse of the dollar or the euro.

Here is a sampling of the responses:

• "I am looking for Congress to set aside partisan politics and start leading the country forward, not left or right. Just lead, and the people and the economy and the markets will follow."
• "An improvement in employment numbers is what I am looking for. But since Congress doesn't seem to be interested in job creation, I will continue my 'little risk, little reward' investment strategy."
• "Job creation. We need Americans to be employed."
• "The key to a recovery is improvement in the foreclosure rate and housing market."
• "I'm expecting the Fed to save the day, like always."
• "Resolution of Europe's financial crisis and U.S. development of a manageable debt-reduction plan."
• "More jobs!!!!!!!!"

This week's AAII Sentiment Survey results:

• Bullish: 30.2%, down 8.4
• Neutral: 29.5%, up 0.5
• Bearish: 40.3%, up 8.0

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> September 1. 2011

The latest AAII Sentiment Survey reveals that bullish sentiment among individual investors has exceeded bearish sentiment for the first time since the end of July. The percentage of individual investors who expect stock prices to rise over the next six months continued its slow upward climb, up 2.2% to a six-week high of 38.6%. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, increased 6.4 percentage points to 29.0%. Even with the strong upward bump this week, neutral sentiment has been below its historical average of 31% for seven consecutive weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped by 8.6 percentage points to 32.3%. While this is the 25th time in 28 weeks that pessimism has been above its historical average of 30%, the 8.6 percentage point drop is the largest single week decline in bearish sentiment since December 23, 2010.

All of the sentiment readings are now within a few percentage points of their long-term averages.

This week's special question asked AAII members how much, if any, margin of error they were factoring into third- and fourth-quarter earnings estimates. Many respondents thought analyst forecasts were between 5% and 20% too high. Others thought the profit projections would be pretty close to the actual results. Some individual investors thought the estimates would end up being wrong, but were unsure by how much.

Here is a sampling of the responses:

• "I believe they are 10% to 15% too high. Analysts will soon start revising forecasts down."
• "The earnings forecasts have been too optimistic and are not taking into account the recent downtrend."
• "I don't usually put a percentage on the error, but I always assume earnings estimates are on the high end."
• "Analysts will be wrong for sure, but I'm not smart enough to know which way."
• "Typically, analysts miss actual earnings 70% of the time. I don't pay much attention to earnings estimates any more."

This week's AAII Sentiment Survey results:

• Bullish: 38.6%, up 2.2
• Neutral: 29.0%, up 6.4
• Bearish: 32.3%, down 8.6

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.) The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 25. 2011

Bullish sentiment slightly improved in the latest AAII Sentiment Survey. The percentage of individual investors who expect stock prices to rise over the next six months edged up 0.9% to a four-week high of 36.4%. The historical average is 39%.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, fell 2.0 percentage points to 22.6%. This is the sixth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, rebounded by 1.1 percentage points to 41.0%. This is the 24th time in 27 weeks that pessimism has been above its historical average of 30%.

Bearish sentiment has been at or above 41% during three out of the last four weeks, equaling or exceeding one standard deviation above the average. This puts pessimism at high, but not excessive levels. The numbers show continued uncertainty on the part of individual investors about where stock prices are headed. Market volatility, the slow pace of economic growth and sovereign debt concerns (both in the U.S. and in Europe) are all playing a role. The increase in bullish sentiment, however, shows that some individual investors believe that the selling pressure has made the prices of certain stocks attractive.

This week's special question asked AAII members what, if anything, they have done in reaction to this month's volatility. Answers varied, though the largest number of respondents said they bought stocks. The second-most common response was that individual investors are looking for bargains among stocks. Making no changes to came in third. A small number said they either sold stocks or were holding more cash (with proceeds coming from the selling of stocks, bonds, gold or short positions).

Here is a sampling of the responses:

• "Yes, I bought some stocks. I like things on sale!"
• "I've picked up a couple of bargains and am considering adding to my long-term holdings."
• "I have taken advantage of the drop in prices to execute buys for stocks on my watch list. For many of these buys, the dividend yield is at 5%."
• "Not much. I've looked for bargains and nibbled at one, but I am still waiting for better valuations to come."
• "I have paid less attention to the markets and done nothing with my holdings. I am confident that stocks will rebound strongly later this year."
• "I've gotten out of stocks and am battening down the hatchets."

This week's AAII Sentiment Survey results:

• Bullish: 36.4%, up 0.9
• Neutral: 22.6%, down 2.0
• Bearish: 41.0%, up 1.1

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 18. 2011

Bullish sentiment rose 2.1 percentage points to 35.6% in the latest AAII Sentiment Survey. This is the second consecutive weekly increase in optimism that stock prices will rise over the next six months. Despite the improvement, bullish sentiment remains below its historical average of 39% for the fourth week in a row.

Neutral sentiment, expectations that stock prices will be essentially unchanged over the next six months, rose 2.8 percentage points to 24.6%. This is the fifth consecutive week that neutral sentiment has been below its historical average of 31%.

Bearish sentiment, expectations that stock prices will fall over the next six months, dropped 5.0 percentage points to 39.8%. This was the second consecutive weekly decrease in pessimism. Even with the drop, bearish sentiment is above its historical average of 30% for the 23rd time in 26 weeks.

The level of pessimism continues to pull back from the 2011 high recorded two weeks ago. Even with the improvement in optimism. a higher percentage of individual investors still expect stock prices to fall over the next six months than those who expect prices to rise. The recent volatility in the markets has created additional uncertainty. This is in addition to the problematic headline risk caused by the slow pace of economic growth and sovereign debt issues (both in the U.S. and in Europe).

This week's special question asked AAII members which sectors or industries they like right now. Energy was the overwhelming favorite. AAII members also expressed a preference for basic materials/commodities, health care, utilities and technology. Many explicitly said they were seeking out dividend-paying stocks.

When the same question was asked in late May, AAII members said they liked energy, health care and technology.

This week's AAII Sentiment Survey results:

• Bullish: 35.6%, up 2.1 percentage points
• Neutral: 24.6%, up 2.8 percentage points
• Bearish: 39.8%, down 5.0 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 11. 2011

Bullish sentiment rebounded 6.3 percentage points to 33.4% in the latest AAII Sentiment Survey. Even with the improvement. optimism that stock prices will rise over the next six months remained below its historical average of 39% for the 14th time in the last 17 weeks.

Neutral sentiment. expectations that stock prices will stay essentially unchanged over the next six months. fell 1.2 percentage points to 21.8%. This is the lowest neutral sentiment has been since February 3. 2011. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. dropped 5.1 percentage points to 44.8%. This is the 22nd time in the past 25 weeks that bearish sentiment has been above its historical average of 30%.

Even with this week's decline. bearish sentiment remains at high. though not excessive. levels. Pessimism is more than one standard deviation above its historical average. which makes it unusual. but not extraordinary.

The high level of pessimism shows that individual investors remain worried that stock prices could fall further. The improvement in bullish sentiment does signal that some believe the brunt of the recent declines is over (or is nearing an end). however. Headline risk remains problematic. especially with many individual investors previously concerned about the pace of economic growth and the federal deficit. prior to the start of the current market correction.

This week's special question asked if the Federal Reserve or the President/Congress should introduce new stimulus to accelerate growth. and if so. what type (e.g.. buy more Treasuries. spend on infrastructure. extend the payroll tax cut). AAII members responded with a variety of ideas. The most popular were spending on infrastructure. extending the payroll tax holiday and reforming taxes and/or lowering them.

A minority said the government should not provide any additional stimulus. The deficit and a sense that prior stimulus has not worked were commonly listed as reasons for objecting. Some members thought the government should cut spending.

This week's AAII Sentiment Survey results:

• Bullish: 33.4%. up 6.3 percentage points
• Neutral: 21.8%. down 1.2 percentage points
• Bearish: 44.8%. down 5.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> August 4. 2011

Bullish sentiment plunged 10.7 percentage points in the latest AAII Sentiment Survey. The proportion of individual investors who expect stock prices to rise over the next six months fell to 27.2%. an eight-week low. The historical average is 39%.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. dropped 7.8 percentage points to 23.0%. This is the lowest neutral sentiment has been since February 3. 2011. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. surged 18.4 percentage points to 49.9%. This is the highest level of pessimism since May 27. 2010 and the biggest weekly percentage point increase since July 20. 2006. It is also the 21st time in the 24 weeks that bearish sentiment has been above its historical average of 30%.

There was a large amount of headline risk throughout the survey period. Events contributing to the negative sentiment included the debt ceiling debate. weak economic data such as second-quarter GDP and the July ISM manufacturing survey. and a eight-day losing streak for the Dow Jones Industrial Average. Many individual investors already had concerns about the pace of economic growth. so it is not surprising to see their nerves rattled by the negative headlines.

At current levels. bearish sentiment is unusually high. but not extraordinarily so. Two standard deviations above the historical average is 50.7%. and levels above that mark are outliers.

This week's special question asked AAII members what impact. if any. the debt ceiling debate has had on U.S. economic growth. The majority of respondents said that the debate had a negative impact. though many thought it had little or no impact. There was a large variance in the comments with many expressing frustration at politicians and the political process. Some thought the debate and the lack of a long-term solution has created uncertainty. It should be noted that many AAII members had expressed concerns about the size of the federal deficit before the recent debt ceiling debate occurred.

Here is a sampling of the responses. some of which were given before the debt ceiling debate was resolved:

• "I expect a negative impact because the debt ceiling increase is now and the meager cuts are a future promise at best."
• "I think the uncertainty of the outcome of the debate (over not only the debt ceiling. but future tax policy. healthcare and federal regulations) has caused businesses-big and small-to move cautiously."
• "It was another hurdle for an already frail market to overcome. In the short and perhaps long term. it did considerable damage to our economy."
• "A negative impact. Congress is just delaying problems rather than dealing with them."
• "Very little impact. It's market noise and doing nothing more than adding to the short-term volatility."

This week's Sentiment Survey results:

• Bullish: 27.2%. down 10.7 percentage points
• Neutral: 23.0%. down 7.8 percentage points
• Bearish: 49.9%. up 18.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 28. 2011

Bullish sentiment fell 2.0 percentage points to 37.8% in the latest AAII Sentiment Survey. This is the first time in four weeks that the percentage of individual investors who expect stock prices to rise over the next six months fell below the historical average of 39%.

Neutral sentiment. expectations that stock prices will rise over the next six months. rose 1.2 percentage points to 30.7%. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. edged up 0.8 percentage points to 31.4%. This is a five-week high for bearish sentiment. The historical average is 30%.

Bearish sentiment has yet to rise significantly in reaction to the ongoing debt ceiling standoff in Washington. D.C. AAII members told us in early July that they were more focused on corporate earnings than the debt ceiling. This said. many individual investors have previously expressed concern about the federal deficit and potentially higher interest rates in the future.

Though bullish sentiment is at a five-week low and bearish sentiment is at a five-week high. both indicators remain close to their historical averages. Optimism about better-than-expected second-quarter earnings is tempered by concerns about the slow pace of economic growth. the lack of a resolution to the U.S. debt ceiling debate and European sovereign debt.

Individual investors have remained cautious about the direction of stock prices throughout most of the year. This is evident in bearish sentiment. which has been at or above its historical average for 20 out of the last 23 weeks.

This week's special question asked AAII members if they thought the European Union (EU) would be able to find a resolution to its sovereign debt problems (e.g.. Greece). Responses were evenly split between those who thought a resolution would be found and those who thought a resolution would not be found. A few were not sure or didn't believe they had enough information to form a judgment.

Here is a sampling of the responses:

• "I am confident that the EU will find a 'resolution' to the sovereign debt problems. I wish I had an idea of what that 'resolution' will look like and when they will find it."
• "I am confident that the EU will eventually find a resolution. but it will probably be a long. bumpy road to get there."
• "I don't know how it can be achieved with many budgets and taxing authorities and one currency! I am not confident."
• "Germany is going to pull the plug. I have no confidence at all that the European Union will have the ability to stem the flow of funds going out."
• "The short term will be difficult. I am more sanguine about the long term."

This week's AAII Sentiment Survey Results:

• Bullish: 37.8%. down 2.0 percentage points
• Neutral: 30.7%. up 1.2 percentage points
• Bearish: 31.4%. up 0.8 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 21. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. edged up 0.5 percentage points in the latest AAII Sentiment Survey. This week's reading of 39.9% keeps optimism close to its historical average of 39% for the second consecutive week.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. fell 1.9 percentage points to 29.5%. This is a four-week low for neutral sentiment. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. rose 1.4 percentage points to 30.6%. This is a four-week high. The historical average is 30%.

Both bullish and bearish sentiment are close to their historical averages. Optimism about better-than-expected second-quarter earnings is tempered by concerns about the slow pace of economic growth. the lack of a resolution to the U.S. debt ceiling debate and European sovereign debt.

This week's special question asked what the chances were of a third round of stimulus from the Federal Reserve. Responses varied. though the largest number of respondents said the odds were low (less than a 35% chance). A smaller. but significant group said the odds were high (greater than 65%). Several said it was essentially a coin toss (between a 40% and a 60% chance).

Here is a sampling of the responses:

• "Depends on the economy. If the economy continues to stall. the Fed will act."
• "High. With the economy continuing to languish. the Fed will likely provide a new round of stimulus."
• "Hopefully low. Monetary stimuli have had very little effect on the economy so far."
• "I think the chances are low. The economy is improving. albeit slowly. As long as there is improvement. the Fed can't justify QE3."
• "I think the chances are very high. As much as I favor free markets and decreased taxes. this is an upcoming election year."
• "Stimulus efforts have not worked so far in creating employment. I doubt they will repeat the same policy."

• Bullish: 39.9%. up 0.5 percentage points
• Neutral: 29.5%. down 1.9 percentage points
• Bearish: 30.6%. up 1.4 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 14. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 2.5 percentage points in the latest AAII Sentiment Survey. Optimism declined to 39.3%. putting it essentially even with its historical average of 39%.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next months. fell 2.1 percentage points to 31.4%. The historical average is 31%.

Bearish sentiment. expectations that stock prices will rise over the next six months. jumped 4.6 percentage points to 29.2%. This was the first time pessimism has increased in five weeks. The historical average is 30%.

This week's results showed a reversion to the mean. with all three readings near their historical averages. The weak June jobs report likely added to individual investors' concerns about the pace of economic growth. The lack of progress on resolving the debt ceiling is not helping either. On the other hand. expectations for good second-quarter earnings and the ability of stocks to hold onto much of their recent gains are contributing to individual investors' cautiously optimistic stance.

This week's special question asked AAII members if they are looking at growth. value or dividend-paying stocks right now. Respondents overwhelming said they are looking at dividend-paying stocks. Some clarified by saying they were looking for a combination of dividends and value or dividends and growth. A few expressed a preference for primarily value or growth stocks.

Here is a sampling of the responses:

• "Dividend-paying. I am retired and this adds to the income. In addition. in these uncertain times. the dividend provides a measure of assurance of return."
• "Looking for value and dividend yield. I don't think this is the time for a broad market surge. and I don't trust the growth stocks right now."
• "If the market is going nowhere for the next six months. then dividend-paying stocks appear to be a rational choice."
• "Value and dividend-paying. since both historically perform better in periods of rising interest rates.
• "Good value and growth stocks are very good investments for a bullish market outlook."

This week's AAII Sentiment Survey results:

• Bullish: 39.3%. down 2.5 percentage points
• Neutral: 31.4%. down 2.1 percentage points
• Bearish: 29.2%. up 4.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> July 7. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. increased 3.5 percentage points to 41.8% in the latest AAII Sentiment Survey. This is first the time that optimism has been above its historical average of 39% since April 14. 2011.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 2.1 percentage points to 33.5%. This is a five-week high for neutral sentiment. The historical average is 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. dropped 5.5 percentage points to 24.7%. This is the lowest level of pessimism since January 13. 2011. It is also the just the second time in 20 weeks that bearish sentiment has been below its historical average of 30%.

Bearish sentiment has plunged by a cumulative 23.0 percentage points since setting a 2011 high of 47.7% on June 9. Bullish sentiment has improved 17.4 percentage points over the same period. A combination of factors has led to this shift. including rebounding stock prices and falling gasoline prices. Optimism is close to its historical average. however. and many investors still have concerns about the pace of economic growth and the ongoing debate over the debt ceiling.

This week's special question asked AAII members if they will be more focused on the ongoing debate over the U.S. debt ceiling or on quarterly profits and earnings guidance. The overwhelming majority of respondents said they will be more focused on earnings. A sizeable minority said they would be more focused on the debt ceiling. however. A few respondents said they were either paying equal attention to both or were more focused on other market factors. such as the trend in stock prices.

Here is a sampling of the responses:

• "I'm focused on the debt ceiling debate. because a U.S. default will cause major problems for the stock market."
• "Earnings reports will influence my decisions. The debt ceiling debate will (I predict) soon be settled one way or the other."
• "Earnings until the decision is made to default; then all bets are off!"
• "If the elected officials can't reach agreement on the U.S. debt. I fear many bad things will happen to the U.S. economy."
• "The absolute value of earnings will be determined by the U.S. dollar. I'm a concerned as to what happens with the United States' credit rating and interest rates."

This week's AAII Sentiment Survey Results:

• Bullish: 41.8%. up 3.5 percentage points
• Neutral: 33.5%. up 2.1 percentage points
• Bearish: 24.7%. down 5.5 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 26. 2011

Bullish sentiment fell 1.1 percentage points to 25.6% in the latest AAII Sentiment Survey. Expectations that stock prices will rise over the next six months remained at the lowest level registered since August 26. 2010. The historical average is 39%.

Neutral sentiment. expectations that stock prices will essentially be unchanged over the next six months. rose 0.9 percentage points to 33.0%. This is the sixth consecutive week that neutral sentiment has been above its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. edged up 0.1 percentage points to 41.4%. Pessimism was last higher on September 2. 2010. Bearish sentiment has now been above its historical average of 30% for 13 out of the last 14 weeks.

The continuing volatility in the markets is dampening individual investors' enthusiasm for stocks. (The uneven pace of the economic recovery. still high gas prices and European sovereign debt issues are not helping either.) This can be seen in the bullish sentiment readings. which have fallen for four consecutive weeks and have been below average for six consecutive weeks. Even with the decline. bullish sentiment is just slightly beyond one standard deviation of its historical norm. making the current reading atypical. but still not an outlier.

This week's special question asked AAII members which sectors and industries they like right now. Energy was named by the largest number of respondents. followed by health care and technology. When the same question was asked in February. AAII members said they liked energy. technology and commodities/basic materials.

This week's sentiment survey results:

• Bullish: 25.6%. down 1.1 percentage points
• Neutral: 33.0%. up 0.9 percentage points
• Bearish: 41.4%. up 0.1 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.

]]> May 19. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 4.1 percentage points to 26.7% in the latest AAII Sentiment Survey. This is the lowest level of optimism since August 26. 2010. The historical average is 39%.

Neutral sentiment. expectations that stock prices will remain essentially unchanged over the next six months. slipped 1.7 percentage points to 32.0%. Nonetheless. neutral sentiment is above its historical average of 31% for the fifth consecutive week.

Bearish sentiment. expectations that stock prices will fall over the next six months. jumped 5.8 percentage points to 41.3%. This is the highest level of pessimism since September 2. 2010. It is also the 12th time in 13 weeks that bearish sentiment has been above its historical average of 30%.

The volatility in stock prices. recent drop in commodity prices and continued high cost of gasoline have taken their toll on investor confidence. Though bearish sentiment is more than 11 percentage points above average. it is not at levels that would suggest investors are overly pessimistic. Rather it is just one standard deviation away from its average. making the current reading atypical. but not an outlier.

This week's special question asked AAII members whether the U.S. economy is doing better or worse than government statistics indicate. The only thing close to a consensus among the responses was an opinion that the data is not accurately reflecting the health of the economy. (A small number of respondents. however. took the opposite stance and thought the data was accurately portraying the economy.)

Among those who thought the data was incorrectly describing the economy. the largest proportion described conditions as being worse than indicated. Many. however. said the economy is performing better than the official statistics show.

Here is a sampling of the responses:

This week's sentiment survey results:

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> May 12. 2011

Bullish sentiment. expectations that stock prices will rise over the next six months. fell 4.7 percentage points to 30.8% in the latest AAII Sentiment Survey. This is the lowest level of optimism in eight weeks. The historical average is 39%.

Neutral sentiment. expectations that stock prices will remain essentially unchanged over the next six months. rose 1.1 percentage points to 33.7%. This is the fourth consecutive week that neutral sentiment has been above its historical average of 31%.

Bearish sentiment is at an eight-week high. Expectations that stock prices will fall over the next six months rose 3.6 percentage points to 35.5%. Bearish sentiment has been above its historical average of 30% for 11 out of the past 12 weeks.

The underlying worry about the direction of the stock market intensified this week. as can be seen by the increase in bearish sentiment. At the same time. the level of cautious optimism continued to erode as bullish sentiment declined for the fourth time in five weeks. Positive sentiment from better-than-expected earnings has been countered by rising prices. the uneven pace of the economic recovery. the federal deficit and recent volatility in stock prices.

This week's special question asked AAII members how the current price of gasoline. which is averaging approximately $4 per gallon nationally. is affecting their six-month outlook for stocks. The majority of respondents said it was having a negative impact. A sizeable minority said it was not impacting their outlook. Several others predicted that gasoline prices will fall. Oil prices declined during the survey period and this may have had some impact on the results.

Here is a sampling of the responses:

• "It's like an extra tax on consumers. which negatively impacts the economy."
• "Consumers will have to cut back on expenditures. Stock prices will drop slightly."
• "The longer the price stays at this level. the slower the economy will grow."
• "Gas prices are starting to go down. but not enough. Gas shouldn't have much overall effect on stocks."
• "It has already been discounted by the financial markets."
• "I'll avoid driving."

• Bullish: 30.8%; down 4.7 percentage points
• Neutral: 33.7%; up 1.1 percentage points
• Bearish: 35.5%; up 3.6 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> May 5. 2011

Bullish sentiment fell 2.4 percentage points to 35.5% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months remained below its historical average of 39% for the third consecutive week.

Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 1.2 percentage points to 32.7%. This is the third consecutive week that neutral sentiment is above its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. increased 1.2 percentage points to 31.9%. The level of pessimism remains within a very tight right range for the fifth time in six weeks. The historical average is 30%.

Bearish sentiment has now come in above its historical average for 10 out of the last 11 weeks. Yet. over the same time period. more investors describe themselves as upbeat than downbeat. Combined. these indicators tell us that though individual investors. in aggregate. remain optimistic about the direction of stock prices. they are only cautiously optimistic. Positive sentiment from rising stock prices and better-than-expected earnings is being countered by rising gasoline and food prices. the uneven pace of the economic recovery and the federal deficit.

This week's special question asked AAII members when the Federal Reserve will start to raise interest rates. Responses varied from as early as this June to after the 2012 presidential elections. The first quarter of 2012 was selected by the largest number of respondents. followed by the fourth quarter of 2011. An even number of respondents thought the first rate hike will either occur in the third quarter of 2011 or after the first quarter of 2012.

Here is a sampling of the responses:

• "If this summer produces consistent growth in prices. the Fed will raise rates after Labor Day."
• "Rates have been held artificially low and with inflation appearing in several sectors. the Fed will probably start to move rates up in the fourth quarter of this year."
• "First quarter of 2012. based on Fed Chairman Ben Bernanke's press conference."
• "After the first quarter of 2012. The Fed will wait as long as they can in hopes of fueling the economy."
• "Fourth quarter of 2012. The Fed will not want to impact the elections. so they will hold out longer than they should."

This week's sentiment survey results:

• Bullish: 35.5%; down 2.4 percentage points
• Neutral: 32.7%; up 1.2 percentage points
• Bearish: 31.9%; up 1.2 percentage points

Historical Averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

]]> April 28. 2011

Bullish sentiment rebounded 5.7 percentage points to 37.9% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months remained below its historical average of 39% for the second consecutive week.

Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. fell 5.4 percentage points to 31.5%. The decline brought neutral sentiment back close to its historical average of 31%.

Bearish sentiment. expectations that stock prices will fall over the next six months. declined 0.3 percentage points to 30.6%. Even with the small drop. bearish sentiment has been essentially unchanged during four out of the last five weeks. The historical average is 30%.

Individual investors continue to be cautiously optimistic. Better-than-forecast earnings and rising stock prices are keeping many optimistic. while inflationary pressures and the uneven pace of the economic recovery remain a concern.

This week's special question asked AAII members whether they thought the stock market is fairly valued. undervalued or overvalued. The majority of the respondents were split between describing stocks as being fairly valued and overvalued. A notable minority thought stocks were undervalued.

Here is a sampling of the responses:

• "The market is fairly valued and is morphing into becoming overvalued."
• "I believe the market is fairly valued. but. at this rate. not for long. Stocks could become overvalued in a couple of months."
• "Probably fairly valued. However. world events have created so much volatility that the market remains very risky."
• "I believe the market is overvalued because earnings are based on record profit margins. which will return to normal or get worse if inflation picks up."
• "If inflation rises. then the market is overvalued and will decline."
• "Undervalued. Stocks are climbing the wall of worry." This week's sentiment survey results:
  • Bullish: 37.9%. up 5.7 percentage points
  • Neutral: 31.5%. down 5.4 percentage points
  • Bearish: 30.6%. down 0.3 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 21. 2011

  Bullish sentiment plunged 10.1 percentage points to 32.2% in the latest AAII Sentiment Survey. The percentage of investors who expect stock prices to rise over the next six months is at a five-week low. This is also the first time in four weeks that bullish sentiment is below its historical average of 39%.
  
  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. soared 10.1 percentage points to 36.8%. This is the highest neutral sentiment has been since March 4. 2010. It is also the first time in five weeks that neutral sentiment has been above its historical average of 31%.
  
  Bearish sentiment. expectations that stock prices will fall over the next six months. was unchanged at 31.0%. The historical average is 30%.
  
  The sharp increase in neutral sentiment follows modest decline in stock prices and a continued climb in gasoline prices. Though bullish sentiment has been above its historical average for the last three weeks. optimism among individual investors has been cautious. Corporate earnings. a rebounding economy and the stock market’s rally have given individual investors hope. while the sluggish labor market. rising gasoline prices. federal deficit and global events are ongoing sources of concern.
  
  This week's special question asked AAII members how much impact the political wrangling about the federal deficit ceiling was having on their sentiment toward stocks. Responses varied from no impact to a significant impact. Some AAII members did not view the deficit issue as having an immediate impact. but thought it could adversely affect stock prices in the future if it is not dealt with.
  
  I should point out that the survey period ran from Thursday. April 14. through Wednesday. April 20. The majority of the responses were provided prior to Standard & Poor's issuing of a negative credit watch warning for U.S. sovereign debt on Monday morning. There was no difference in the variance of responses before or after the warning was announced.
  
  Here is a sampling of the responses:

  • “As the reaction to the downgrade of U.S. debt by S&P showed this week. the political wrangling can have some temporary impact on stock sentiment.”
  • “I think it is significant. but I also believe there are enough grown-ups on both sides of the political aisle to not let the country default.”
  • “It adds a significant amount of uncertainty. which has a significant impact on the outlook for growth.”
  • “No impact on sentiment. The geopolitical events. resource demand versus supply. and worldwide financial risk are having the major effects on sentiment.”
  • “Not much impact yet. but give it a few weeks.”
  • “It is not having any effect on my sentiment. because this is what politicians do. No action and lots of talking.”

  This week's sentiment survey results:

  • Bullish: 32.2%. down 10.1 percentage points
  • Neutral: 36.8%. up 10.1 percentage points
  • Bearish: 31.0%. up 0.0 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 14. 2011

  Bullish sentiment slipped 1.4 percentage points to 42.2% in the latest AAII sentiment survey. Optimism that stock prices will rise over the next months stayed within a two percentage point range for the third consecutive week. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. edged down 0.8% to 26.8%. This is a nine-week low for neutral sentiment. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 2.1 percentage points to 31.0%. The historical average is 30%.

  Individual investors remain optimistic about the short-term direction for stock prices. although cautiously so. Bearish sentiment received a boost from last week's federal budget battle and a small decline in stock prices. but both optimism and pessimism remain near their historical averages. Corporate earnings. a rebounding economy and the stock market's rally are giving individual investors hope. while the sluggish labor market and global events are keeping them from being overly sanguine.

  This week's special question asked AAII members about their longer-term view. Specifically. they were asked whether there was more potential upside or downside for stocks over the next 12 to 24 months. Respondents were divided. with slightly more anticipating a further rise in stocks prices than those who thought stock prices will fall. A small number thought stocks would fluctuate and not show big gains or losses.

  Here is a sampling of the responses.

  • "Our recovery is still in the early stages. The potential for stocks is positive."
  • "There is more potential for gains over the next 12-24 months as the economy gains steam."
  • "We are in a secular bear market. and I foresee a huge downside for stocks."
  • "I think there is more potential downside for stocks. I base this on the Middle East conflicts and the current presidential administration's economic policies."
  • "I anticipate a volatile market where selectivity will be important."

  This week's sentiment survey results:

  • Bullish: 42.2%. down 1.4 percentage points
  • Neutral: 26.8%. down 0.8 percentage points
  • Bearish: 31.0%. up 2.1 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> April 7. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. improved 1.8 percentage points to 43.6% in the latest AAII Sentiment Survey. This was the third consecutive weekly increase and it puts optimism at a seven-week high. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will be essentially unchanged over the next six months. remained essentially unchanged for the second consecutive week at 27.6%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 2.2 percentage points to 28.8%. This was the third consecutive decline in pessimism. which is now at a seven-week low. The historical average is 30%.

  The stock market's ability to shrug off bad news--including Japan. European debt. rising commodity prices and the threat of a government shutdown--is helping individual investors regain their confidence in the short-term direction for stock prices. It should be noted. however. that both bullish and bearish sentiment are still close to their historical averages. Therefore. I would describe individual investors as being optimistic. but cautiously so.

  This week's special question asked AAII members about their expectations for first-quarter earnings. The consensus was that first-quarter profits will be good. Some respondents. however. expressed concern about the impact higher inflation could have on earnings for the remainder of the year.

  Here is a sampling of the responses:

  • First-quarter earnings should be very strong."
  • I believe that pending the end of the Fed's quantitative easing program. we will generally see strong earnings."
  • First-quarter earnings will generally be okay. Second- and third-quarter earnings will be more interesting."
  • I will be watching for accompanying guidance about second-quarter earnings. especially warnings about rapidly escalating input costs."

  This week's AAII Sentiment Survey Results:

  • Bullish: 43.6%. up 1.8 percentage points
  • Neutral: 27.6%. up 0.4 percentage points
  • Bearish: 28.8%. down 2.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 31. 2011

  Bullish sentiment improved 4.1 percentage points to 41.8% in the latest AAII Sentiment Survey. This is the first time optimism that stock prices will rise over the next six months has been above its historical average of 39% since February 17. 2011.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. was down a very modest 0.2 percentage points at 27.1%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. declined 3.9 percentage points to 31.1%. This is a six-week low for pessimism. The historical average is 30%.

  The S&P 500's rebound over the past seven days has renewed investors' optimism about the direction of stock prices. It is a cautious optimism. however. with bearish sentiment staying above its historical average for sixth consecutive week.

  This week's special question asked AAII members at what point rising oil prices would have them worried about a potential slowing of economic growth. The majority of respondents fell into one of three groups. The first thought oil was already having a negative impact. The second said if crude stayed at $120 per barrel or higher. economic growth would be curtailed. The third said oil would have to rise above the $140 - $150 per barrel range to make them worried.

  Here is a sampling of the responses:

  • "I am somewhat concerned at these levels; oil at $125 per barrel or more would turn my concern into real worry."
  • "A price per barrel above $120 for a significant period of time would worry me and force me to re-examine my entire portfolio."
  • "I think the more common barometer is the price of a gallon of gas. I believe the breaking point is $4."
  • "At current levels. I am not concerned. If oil got to $140 per barrel. then I think it would be a headwind. Also. if the price of gas rose above $4 a gallon."
  • "The current price of oil will slow growth as it impacts discretionary spending by consumers. Automobiles do not run on iPads."

  This week's AAII Sentiment Survey results:

  • Bullish: 41.8%. up 4.1 percentage points
  • Neutral: 27.1%. down 0.2 percentage points
  • Bearish: 31.1%. down 3.9 percentage point

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 24. 2011

  Bullish sentiment rebounded 9.2 percentage points to 37.7% in the latest AAII Sentiment Survey. This is a five-week high for optimism about the six-month direction of stock prices. Nevertheless. bullish sentiment continues to stay below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will stay essentially unchanged over the next six months. fell 4.1 percentage points to 27.3%. The historical average is 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. declined 5.2 percentage points to 35.0%. Even with the pullback. bearish sentiment remained above its historical average of 30% for the fifth consecutive week.

  The percentages of individual investors describing themselves as bullish or bearish remained close for the fourth time in five weeks. The lack of a clear signal is a reflection of the market's recent volatility. Though this week's rebound in stock prices helped restore some optimism. the latest survey results show that many AAII members continue to have cautious attitudes.

  This week's special question asked AAII members whether domestic or global/foreign issues were having a bigger impact on their sentiment. The responses were evenly split. with some members saying both domestic and international events were having an equal impact. Here is a sampling of the responses:

  • "Domestic issues--I think our economy is coming back. and the various threats are not likely going to be strong enough to reverse this."
  • "It is the labor markets. housing and the lack of political will to reduce the budget and adopt policies to improve the economy."
  • "The financial markets in the European Union are a continuing threat to growth in the overall global economy."
  • "With the problems in the Middle East. the disaster in Japan. and our unstable economy. I see nothing but an unstable market."
  • "I am amazed at the resilience of the market given all of the bad news; it just keeps bobbing up like a cork."

  This week's AAII Sentiment Survey results:

  • Bullish: 37.7%. up 9.2 percentage points
  • Neutral: 27.3% down 4.1 percentage points
  • Bearish: 35.0%. down 5.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 17. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. fell 7.5 percentage points to 28.5% in the latest AAII Sentiment Survey. This is the lowest optimism has been since August 26. 2010. It is also the fourth consecutive week that bullish sentiment has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. edged down 0.3 percentage points to 31.4%. This is the second consecutive week that neutral sentiment has been slightly above its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. jumped 7.8 percentage points to 40.1%. This is the highest pessimism has been since September 2. 2010. Bearish sentiment has now been above its historical average of 30% for four consecutive weeks.

  The continued volatility in the markets is clearly taking a toll on individual investors' attitudes. as can be seen by today's numbers. Neither bullish nor bearish sentiment are at levels that would be considered contrarian. however. based on the survey's historical results. Nonetheless. if the S&P 500 is in the midst of a correction. it is likely we could continue to see elevated levels bearish sentiment until a short-term floor for stock prices is found.

  This week's special question asked AAII members if the Federal Reserve should be more aggressive in fighting inflation or if the central bank should stay focused on the economy. Approximately half of respondents said the Fed should shift its focus towards fighting inflation. A sizeable minority thought the Fed was correct to keep its focus on stimulating the economy. however.

  Here is a sampling of the responses.

  • "I would like to see the Fed back off (on providing economic stimulus). I believe they are setting us up for inflation in the long run."
  • "The Fed is already too late in fighting inflation. Gas and food inflation is just beginning."
  • "I am not sure that aggressively fighting inflation is warranted at this point. but the Fed should stop stimulating the economy."
  • "The Fed should continue to stimulate the economy because of problems in Europe. unrest in the Middle East and a possible slowdown in China's economy."
  • "Stimulating the economy is more important. Unemployment is still the number one problem for a consumer-based economy."

  This week's AAII Sentiment Survey results:

  • Bullish: 28.5%. down 7.5 percentage points
  • Neutral: 31.4%. down 0.3 percentage points
  • Bearish: 40.1%. up 7.8 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 10. 2011

  Bullish sentiment slipped 0.8 percentage points to 36.0% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months is at its lowest level since September 2. 2010. The historical average is 39%.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. rose 1.7 percentage points to 31.7%. This is the first time neutral sentiment has been above its historical average of 31% since August 5. 2010.

  Bearish sentiment. expectations that stock prices will fall over the six next months. declined 0.8 percentage points to 32.3%. This is the third consecutive week that pessimism has been above its historical average of 30%.

  In a word. individual investors remain split over the short-term direction of stock prices. Though slightly more AAII members are optimistic than pessimistic. bullish sentiment remains below its historical average. This is occurring as the S&P 500 has stayed within an approximate 3% trading range since late February. The numbers reflect both recognition of stronger corporate earnings and unease about the threat of higher inflation and interest rates.

  This week's special question asked AAII members what type of stocks they are looking at: value. growth or dividend-paying. Respondents overwhelmingly expressed their preference for dividend-paying stocks.

  Here is a sampling of the responses:

  • "Dividend-paying. They provide a return even if the market does not go up. They also seem to be a much better value than most bonds and CDs at this time."
  • "With interest rates certain to rise over time and bond prices coming down. dividend-paying stocks promise better income return as well as the potential to increase in value."
  • "While I am looking for growth at a reasonable price (GARP). as a retiree. I insist upon receiving (preferably growing) dividends."
  • "Value and dividend paying stocks. The market is fairly valued."

  This week's sentiment survey results:

  • Bullish: 36.0%; down 0.8 percentage points
  • Neutral: 31.7%; up 1.7 percentage points
  • Bearish: 32.3%; down 0.8 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> March 3. 2011

  Bullish sentiment is essentially unchanged in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months edged up 0.2 percentage points to 36.8%. This is the second consecutive week that bullish sentiment has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will be essentially unchanged over the next six months. rose 2.7 percentage points to 30.0%. This is the highest reading for neutral sentiment since August 12. 2010. Despite the increase. neutral sentiment remained below its historical average of 31% for the 30th consecutive week.

  Bearish sentiment. expectations that stock prices will fall. slipped 3.0 percentage points to 33.2%. Despite the decline. pessimism stayed above its historical average of 30% for the second consecutive week.

  Individual investors remained cautious about the short-term outlook for stocks. This is not surprising given the recent return of volatility to the stock market and higher oil prices. In addition. it is worth noting that there is underlying unease about the pace of the economic recovery. inflation and the federal deficit.

  This week's special question asked AAII members if they have made any changes to their portfolios because of the turmoil in the Middle East. The overwhelming majority of respondents said no. they had not. Some did say they bought energy stocks. while others indicated the market's recent volatility was a bigger factor in their decisions.

  Here is a sampling of the responses:

  • "No. I have not made any changes. I only see only the oil/gas sector being affected by this in the short term by this."
  • "No. but I expect to see an increase in volatility in the short run."
  • "No changes. but I've become more apprehensive about the short-term outlook for stocks."
  • "I've increased my exposure to oil. Oil always wins."
  • "No changes. I'm nearing retirement. but am still a long-term investor."

  This week's sentiment survey results:

  • Bullish: 36.8%. up 0.2 percentage points
  • Neutral: 30.0%. up 2.7 percentage points
  • Bearish: 33.2%. down 3.0 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 24. 2011

  Bullish sentiment. expectations that stock prices will rise over the next six months. plunged 9.9 percentage points to 36.6% in the latest AAII Sentiment Survey. This is the first time in 25 weeks that optimism has been below its historical average of 39%.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. edged down 0.6 percentage points to 27.2%. This is the 29th consecutive week that neutral sentiment has remained below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. surged 10.7 percentage points to 36.2%. Pessimism is at its highest level since September 2. 2010. This is just the fourth time in the past 24 weeks that bearish sentiment has been above its historical average of 30%.

  The ongoing instability in the Middle East is intensifying concern about higher rates of inflation. Individual investors are already seeing higher gas prices at the pump. and there is worry that even higher prices could slow down the pace of the economic recovery. Though AAII members had been optimistic about the direction of stock prices. there was underlying unease about jobs. the federal deficit and the potential for rising interest rates and inflation. Thus. though individual investors were hopeful. they were not exuberant.

  This week's special question asked AAII members what economic or market-related catalysts they are looking for over the next few months. Responses varied. though the possibility of higher inflation was cited by the largest number of respondents. Many individual investors said they were monitoring events in the Middle East. expecting higher interest rates and watching to see if Washington will make any meaningful progress on the deficit and avoiding a shutdown.

  Here is a sample of the responses.

  • "Inflation. I believe there is growing pressure for producers to start passing on some of the rise in commodity costs soon. or their profitability will begin to suffer."
  • "North Africa is like a smoldering tinderbox. and that is sure to have ramifications on the U.S. markets."
  • "I am watching Washington. Will it engage in problem solving or political behavior with respect to its fiscal agenda?"
  • "I am looking at the all the capital that corporate America is sitting on. If I see them start to utilize the capital. I will be long on large-cap stocks."
  • "Employed people spending money drive our economy. Steadily increasing employment is key to our continued recovery."

  This week's sentiment survey results:

  • Bullish: 36.6%. down 9.9 percentage points
  • Neutral: 27.2%. down 0.6 percentage points
  • Bearish: 36.2%. up 10.7 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 17. 2011

  Bullish sentiment declined 2.8 percentage points to 46.6% in the latest AAII Sentiment Survey. This is the third time in four weeks that optimism has been below 50%. Nonetheless. bullish sentiment. expectations that stock prices will rise over the next six months. was above its historical average of 39% for the 24th consecutive week. This is the second longest such streak in the survey's history.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 4.2 percentage points to 27.9%. This is a seven-week high for neutral sentiment. Nonetheless. neutral sentiment remained below its historical average of 31% for the 28th consecutive week.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 1.3 percentage points to 25.6%. This was the 20th time in the past 23 weeks that pessimism has been below its historical average of 30%.

  As stated above. bullish sentiment has come in below 50% during three out of the last four weeks. Though still high. optimism has cooled a bit from the red hot levels recorded throughout much of December and January. The continuation of the rally's current leg. better-than-expected earnings and calm market conditions are combining to keep individual investors hopeful about the direction of stock prices.

  This week's special question asked AAII members about the current lack of volatility. (There have only been four days since December 3 when the S&P 500 has posted a daily gain or loss of greater than 1%.) Opinions varied. but many members thought the markets are currently experiencing a false sense of calm. A sizeable minority. however. thought the low level of volatility was justified.

  Though the belief that there is a false sense of calm may sound like it contradicts what our weekly sentiment survey has been registering. I think it accurately portrays what many investors are feeling. Earnings and the economy are recovering. but there are still several underlying problems (unemployment. housing. the federal deficit. etc.). Thus. while there is optimism. there is also discomfort.

  Here is a sampling of what AAII members said about the current lack of volatility:

  • "Although it is very encouraging. I continue to have a low level of anxiety."
  • "It's not a false sense of calm. but more an illusion of calm. There is still some serious deleveraging going on in the economy."
  • "It's a false sense of security. Everybody is once again believing in the miracle."
  • "It's justified...Too many positive developments nationally and internationally with mid-term implications to ignore."
  • "I believe the lack of volatility signifies that many people may believe the good times have arrived again."

  This week's sentiment survey results:

  • Bullish: 46.6%; down 2.8 percentage points
  • Neutral: 27.9%; up 4.2 percentage points
  • Bearish: 25.6%; down 1.3 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 10. 2011

  Bullish sentiment declined 2.1 percentage points to 49.4% in the latest AAII Sentiment Survey. Optimism that stock prices will rise over the next six months was above its historical average of 39% for the 23rd consecutive week. This is the second longest such streak since 2004. (Bullish sentiment stayed above its historical average for the 42 consecutive weeks between May 29. 2003. and March 11. 2004.)

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 2.1 percentage points to 23.7%. This was the 27th consecutive week that neutral sentiment has been below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. was unchanged at 26.9%. This was the 19th time in the past 22 weeks that pessimism has been below its historical average of 30%.

  Bullish sentiment came in below 50% for only the second time in the past 10 weeks. Despite this week's dip. bullish sentiment remains at high levels. It is worth noting that during the past 10-weeks. volatility has largely been absent from the markets. with the S&P 500 posting a gain or loss bigger than 1% on just a handful of days. The calm markets. combined with rising stock prices and better-than-expected earnings. are keeping investors optimistic.

  This week's special question asked AAII members which sectors and industries they like right now. Energy was named by the largest number of respondents. followed by technology and commodities/basic materials. In a distant third were financials and health care. When the same question was asked last October. AAII members said they liked technology. followed by commodities. gold. energy. financials. and health care.

  This week's sentiment survey results:

  • Bullish: 49.4%. down 2.1 percentage points
  • Neutral: 23.7%. up 2.1 percentage points
  • Bearish: 26.9%. no change

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> February 3. 2011

  Bullish sentiment rebounded by 9.5 percentage points in the latest AAII Sentiment Survey. The proportion of individual investors who expect stock prices to rise over the next six months rose to 51.5%. Bullish sentiment has now been above its historical average of 39% for 22 consecutive weeks. the second longest such streak in the survey's history.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. fell 2.1 percentage points to 21.6%. This is the 26th consecutive week that neutral sentiment has been below its historical average of 31%.

  Bearish sentiment. expectations that stock prices will fall over the next six months. fell 7.4 percentage points to 26.9%. This is the 18th time in the past 21 weeks that pessimism has been below its historical average of 30%.

  The relative decline in optimism that we have seen during the past few weeks was reversed. Better-than-expected earnings and a lack of additional downward volatility are keeping investors very optimistic.

  It is worth noting that bullish sentiment stayed mostly at high levels during its three-week decline in January. Furthermore. optimism has now topped 50% eight times during the past nine weeks. Though extraordinarily rare. we have seen this occur before. Bullish sentiment stayed at or exceeded 50% during a 28-week stretch between August 14. 2003 and February 19. 2004.

  This week's special question asked AAII members for their Super Bowl predictions. The majority of respondents said the Green Bay Packers will defeat the Pittsburgh Steelers.

  This week's sentiment survey results:

  • Bullish: 51.5%. up 9.5 percentage points
  • Neutral: 21.6%. down 2.1 percentage points
  • Bearish: 26.9%. down 7.4 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> Bullish sentiment fell to a 10-week low in the latest AAII Sentiment Survey. Expectations that stock prices will rise over the next six months fell 8.7 percentage points to 42.0%. Despite the decrease. bullish sentiment remains above its historical average for the 21st consecutive week. This is the second longest streak for above-average bullish sentiment since the survey began in 1987.

  Neutral sentiment. expectations that stock prices will stay essentially flat over the next six months. rose 3.5 percentage points to 23.7%. Nonetheless. neutral sentiment remains below its historical average of 31% for the 25th consecutive week.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 5.2 percentage points to 34.3%. This is the highest level of pessimism since September 2. 2010. It is also only the fourth week since then that bearish sentiment has been above its historical average of 30%.

  Bearish sentiment has nearly doubled over the past four weeks. from 18.3% on January 6 to 34.3% now. Though this does somewhat reflect a reversion to the mean. it also shows that some investors are becoming less enthusiastic about the short-term direction of the stock market. The length of the rally. the 1% decline in the S&P 500 last Wednesday (January 19). and the level of optimism signaled by the various sentiment surveys-including ours-are all contributing factors.

  It is important to note. however. that bullish sentiment continues to stay above its historical average. The current 21-week streak of above-average bullish sentiment is the second longest such streak in the survey's history.

  This week's special question asked AAII Members if they were taking on more risk as of late or if they were investing more conservatively (meaning taking on less risk). About half of the respondents said they are taking on less risk. A third said they are taking on more risk. The rest said they were not making any real changes.

  Here is a sampling of the results:

  • "I'm investing a little more conservatively. since we've had a big run up in the last six months."
  • "Conservatively. Sentiment indicators are extremely bullish. and you know that's a contrarian indicator."
  • "I am investing more of my cash reserves. but with stocks and funds I consider to be of moderate risk."
  • "I have been taking on more risks with my individual stock picks. The run up since March 2009 has perhaps emboldened me."
  • "More risk. The economy still improving. although slowly. President Obama will likely focus more on the economy."

  This week's sentiment survey results:

  • Bullish: 42.0%; down 8.7 percentage points
  • Neutral: 23.7%; up 3.5 percentage points
  • Bearish: 34.3%; up 5.2 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]> January 20. 2011

  Bullish sentiment declined 1.6 percentage points to 50.7% in the latest AAII Sentiment Survey. This is a five-week low for expectations that stock prices will rise over the next six months. Nonetheless. optimism remains more than one standard deviation above its historic average of 39%-a sign that it remains at high levels.

  Neutral sentiment. expectations that stock prices will remain essentially flat over the next six months. fell 4.0 percentage points to 20.1%. This is a 10-week low. Neutral sentiment has been below its historical average of 31% for 24 consecutive weeks.

  Bearish sentiment. expectations that stock prices will fall over the next six months. rose 5.7 percentage points to 29.1%. This is the highest level of pessimism since November 18. 2010. Despite the increase. bearish sentiment stayed below its historical average for the 17th time in the past 19 weeks.

  Bullish sentiment stayed above its historical average for the 20th consecutive week. the second longest streak in the survey's history. A record streak of 42 consecutive weeks occurred between May 29. 2003 and March 11. 2004. The S&P 500 did fall during the months after the above-average bullish sentiment streak ended. but the pullback was a modest. mid-single-digit percentage point drop.

  As far as bearish sentiment rising. it may simply represent a reversion to the mean. Concerns about the economy and the federal deficit have not subsided. even if positive news headlines have most investors feeling more upbeat about the outlook for stocks. Plus. the streak of high bullish readings may have some individual investors concerned that optimism may be too high.

  This week's special question asked AAII members if their views on the economy have changed from what they were six months ago. particularly given recent data. The overwhelming majority of respondents said that no. their views have not changed.

  Here is a sample of the responses.

  • "No. the economy continues to improve at a slow. but steady pace."
  • "No-I keep thinking a slow. hesitant. but undoubted recovery is underway."
  • "No. Until there are enough well-paying jobs created for the unemployed and new job market entrants. my view will not change."
  • "Yes. overall I see progress. but I'm very concerned about the price of gas shutting all that down."
  • "I would say the economy looks better than it did six months ago."

  This week's AAII Sentiment Survey Results:

  • Bullish: 50.7%. down 1.6 percentage points
  • Neutral: 20.2%. down 4.0 percentage points
  • Bearish: 29.1%. up 5.7 percentage points

  Historical Averages:

  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

  The AAII Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise. remain essentially flat. or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online at: http://www.aaii.com/sentimentsurvey

  ]]>