AAII Sentiment Survey: Bullish Sentiment Falls 10.4 Points to 38.1%

Bullish sentiment fell 10.4 points in the latest AAII Sentiment Survey. Bullish sentiment, expectations that stocks will rise over the next six months, registered at 38.1%. This is a four-week low.

Neutral sentiment rebounded 5.8 points to 27.6%. Expectations that the market will remain relatively flat over the next six months rose for the first time in five weeks.

Bearish sentiment rose 4.6 points to 34.3%. The percentage of investors expecting stocks to fall is at a four-week high.

Individual investors, including those who are optimistic about stocks, are concerned that the market is overbought and a short-term pullback is coming. Last Friday's decline only served to heighten worries that the current leg of the rally is getting long in the tooth. It should be noted that though the drop in bullish sentiment was steep, optimism remains near its historical levels.

I have not received any feedback from our members that suggests the accusations against Goldman Sachs (GS) impacted sentiment. Our members simply want the financial industry to adhere to the law, follow regulations and conduct business in a transparent manner.

This week's special question asked members for their thoughts about oil trading above $80 per barrel. The majority of respondents said that crude prices were not influencing their investing decisions, except for making energy stocks more attractive. Many predicted that oil would continue to trade in a range of $70 to $100 per barrel over the foreseeable future. Some indicated that their opinion would change if oil were to rise above $100 per barrel, however.

The polling period for this week's survey ended Wednesday at midnight and the results are not impacted by this morning's market pullback.

This week's AAII Sentiment Survey results:

• Bullish 38.1%, down 10.4 percentage points
• Neutral 27.6%, up 5.8 percentage points
• Bearish 34.3%, up 4.6 percentage points

Long-term averages:

• Bullish: 39%
• Neutral: 31%
• Bearish: 30%

The survey and its results are available online here.