AAII bearish sentiment climbs to 16-month high as optimism tumbles

As a result, the bull-bear spread, a closely watched gauge of investor sentiment, plunged 23.1 percentage points to minus 24.5% from minus 1.4% a week earlier. The measure is unusually low and has remained below its historical average of 6.5% for nine consecutive weeks, underscoring the increasingly cautious mood among individual investors.

Whether sentiment has reached a sufficiently pessimistic extreme to signal a contrarian bottom in stocks remains to be seen.

This week’s special question asked AAII members how the current amount of cash in their portfolio compares with their normal allocation.

Pessimism among individual investors about the near-term outlook for the U.S. stock market surged in the latest American Association of Individual Investors (AAII) Sentiment Survey as optimism tumbled and neutral sentiment also moved lower.

Meanwhile, just over one-third of respondents said their current portfolio cash allocation is in line with their typical level.

The share of investors expecting stock prices to decline over the next six months jumped 14.0 percentage points to 53.3%, the highest level since May 1, 2025, when bearish sentiment stood at 59.3%. Bearish sentiment is unusually high and has remained above its historical average of 31.5% for 32 consecutive weeks.

Neutral sentiment, which reflects expectations that stock prices will remain largely unchanged over the next six months, fell 4.8 percentage points to 17.9%. The reading is unusually low, well below its historical average of 31.0%, and marks the 28th straight week of below-average readings.

Bullish sentiment, or expectations that stock prices will rise over the next six months, dropped 9.2 percentage points to 28.8%. Optimism has now come in below its historical average of 37.5% in seven of the past nine weeks. The latest reading was the lowest since September 11, 2025, when bullish sentiment stood at 28.0%.