Bullish Sentiment Rises the Most Since 2010

“Bullish sentiment posted its largest weekly gain in nearly three years, as neutral sentiment plunged according to the latest AAII Sentiment survey.

Bullish sentiment, expectations that stock prices will rise over the next six months, surged 14.4 percentage points to 45.4%. The spike in optimism was the largest since an 18.4-point weekly gain on July 15, 2010. This week’s jump puts optimism at a six-week high. The historical average is 39%.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, plunged 7.9 percentage points to 22.5%. Neutral sentiment is now at its lowest level since November 15, 2012. The historical average is 30.5%.

Bearish sentiment, expectations that stock prices will fall over the next six months, fell 6.5 percentage points to 32.0%. Even with the decline, pessimism is above its historical average of 30.5% for the fourth consecutive week.

Though this week’s spike in bullish sentiment is large, it primarily represents a reversion to the mean. Two weeks ago, just 28.4% of surveyed AAII members described themselves as optimistic, the lowest level since November 2010. Furthermore, while large spikes in bullish sentiment are unusual, they are not extraordinary. Over the past five years, bullish sentiment has jumped by double-digits 17 times….”

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