INDUSTRY REPORT SERIES
AAII Sentiment Survey July 21, 2022
Pessimism among individual investors about the short-term direction of the stock market continued to decline, falling to a seven-week low in the latest AAII Sentiment Survey. At the same time, optimism extended its rebound into a second week by rising to a seven-week high.
Survey Says
- Bullish sentiment, expectations that stock prices will rise over the next six months, rose 2.7 percentage points to 29.6%. The increase puts optimism back within its typical range of readings for the first time since June 2, 2022.
- Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, increased 1.6 percentage points to 28.2%.
- Bearish sentiment, expectations that stock prices will fall over the next six months, dropped 4.3 percentage points to 42.2%.
Summary
Historically, the S&P 500 index has gone on to realize above-average and above-median returns during the six- and 12-month periods following unusually low readings for the bull-bear spread. Continued volatility in the major stock indexes along with inflation, corporate earnings and increased chatter about the possibility of a recession are all likely weighing on individual investors’ short-term expectations for the stock market.
