Sentiment turned a bit mixed this week with the AAII survey of bullishness remaining relatively neutral and the Investor’s Intelligence survey declining, but remaining at elevated levels. Charles Rotblut of AAII elaborates on this week’s AAII survey:
“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 2.8 percentage points to 30.1%. 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 Investor’s Intelligence survey came in at 50.6% bullish. This was down from last week’s reading of 53.3%, but still remains at historically elevated levels:
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.