Bullish Sentiment Is on the Rise: Investor Survey

Despite all the crosscurrents in the market and jitters about Friday's jobs report, bullish sentiment is on the rise, according to a recent investor survey.

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The number of individual investors who expect stock prices to rise over the next six months rose 2.2 percent to a six-week high of 38.6 percent, according to this week's survey of members of the American Association of Individual Investors. The historical average is 39 percent.

Neutral sentiment, or expectations that stock prices will be essentially unchanged over the next six months, increased 6.4 percentage points to 29 percent. However, AAII said while that was higher this week, neutral sentiment has been below its historical average of 31 percent for seven consecutive weeks.

As for the bears, expectations that stock prices will fall over the next six months dropped by 8.6 percentage points to 32.3 percent.

Investors also thought that analysts' forecasts for third- and fourth-quarter earnings were too high.

Many of the respondents thought the forecasts were between 5 and 20 percent too high, though there were a few that thought they were pretty close.

“The earnings forecasts have been too optimistic and are not taking into account the recent downtrend,” one investor said.


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