Bullish sentiment is slowly, but surely making a comeback according to the latest data from AAII and Investor’s Intelligence. Via AAII:
“Bullish sentiment rose 7.8 percentage points to 40.0% in the latest AAII Sentiment Survey. The percentage of individual investors who expect stocks to rise over the next six months is at a six-week high. The historical average is 39%.
Neutral sentiment, expectations that stock prices will be essentially flat over the next six months, rose 3.9 percentage points to 26.7%. The historical average is 31%.
Bearish sentiment, expectations that stock prices will fall over the next six weeks, fell 11.7 percentage points to 33.3%. This is a five-week low for bearish sentiment.
The upward move made by the major stock indexes over the survey period helped to calm individual investors’ nerves. Nonetheless, sentiment continues to be fragile, as evidenced by the bearish sentiment numbers. Pessimism among individual investors remained above its historical average for a 12th consecutive week.”
The Investor’s Intelligence survey also showed an uptick this week in bullishness. Earlier this week David Rosenberg shed some light on the data:
“The latest Investors Intelligence poll put the bulls at 38.2% from 35.6% a week ago and 32.6% two weeks ago; the bear share has moved down to 34.9% from 35.6%. Over the past two weeks, the bull-bear gap has widened by 550 basis points as investors begin to dip their toes back into the risk pool. These readings are far from dangerous in terms of being overly bullish but they do represent a big enough swing that we shouldn’t rely on short-coverings any more to drive this market higher as has been the case over the past 2-3 weeks.”
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.