Bullish Sentiment Surges to New Highs

“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….”

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