Bullish sentiment, expectations that stock prices will rise over the next six months, increased 3.5 percentage points to 41.8 percent in the latest AAII Sentiment Survey. This is the first time that optimism has been above its historical average of 39 percent since April 14.
Neutral sentiment, expectations that stock prices will stay essentially flat over the next six months, rose 2.1 percentage points to 33.5 percent. This is a five-week high for neutral sentiment. The historical average is 31 percent.
Bearish sentiment, expectations that stock prices will fall over the next six months, dropped 5.5 percentage points to 24.7 percent. This is the lowest level of pessimism since January 13. It is also the just the second time in 20 weeks that bearish sentiment has been below its historical average of 30 percent.
Bearish sentiment has plunged by a cumulative 23.0 percentage points since setting a 2011 high of 47.7 percent on June 9. Bullish sentiment has improved 17.4 percentage points during the same period.
A combination of factors has led to this shift, including rebounding stock prices and falling gasoline prices. Optimism is close to its historical average, however, and many investors still have concerns about the pace of economic growth and the ongoing debate over the debt ceiling.