Though bearish sentiment pulled back to within its normal range, individual investors remain pessimistic overall about the short-term direction of stock prices, according to the latest AAII Sentiment Survey.

By Charles Rotblut, CFA, AAII Individual investors remain pessimistic about the short-term outlook for stocks, even though bullish sentiment did improve in the latest AAII Sentiment Survey. Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 7.5 percentage points to 26.8%. Even with the increase, this is the first time optimism has been below [...]

Bullish sentiment plunged to levels not seen since the end of the last bear market, while bearish sentiment posted its third largest weekly spike in the history of the AAII Sentiment Survey.

Individual investors became both less optimistic and less pessimistic in the latest AAII Sentiment Survey. This is the first reading since last August to show both bullish and bearish sentiment below their historical averages at the same time.

The latest AAII Sentiment Survey results continue to be volatile, with bullish sentiment pulling back and neutral sentiment rebounding. Optimism is very close to its historical average, while pessimism continues to hover slightly above its historical average.

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

Though aggregate pessimism increased as the Dow Jones industrial average reached new record highs, some individual investors described themselves as being more optimistic in the latest AAII Sentiment Survey.

Equity allocations nearly reached a two-year high last month, according to the February AAII Asset Allocation survey. Conversely, fixed-income allocations declined to a 10-month low.

Bearish sentiment is above its historical average for the first time in seven weeks, according to the latest AAII Sentiment Survey.