What is the AAII Sentiment Survey?
The AAII Sentiment Survey is a classic market survey that has been conducted weekly since 1987. Every week, it asks the members of the American Association of Individual Investors the same question: "What direction do you feel the stock market will be in the next six months?"
The Ultimate Contrarian Indicator
Unlike the CNN Fear & Greed Index, the AAII survey directly measures people's "psychological state" (rather than being based on objective trading data). This makes it one of the most popular contrarian indicators among Wall Street institutions.
- When over 50% of retail investors are Bullish, it may indicate that the last potential buyer is already fully invested, making the market vulnerable to a crash.
- When retail investors are extremely Bearish, it indicates that market sentiment has bottomed out and all bad news is likely priced in, which is often the starting point of a bull market.
Our Scoring System
We convert the AAII's Bullish and Bearish percentages into our unified 0-100 Fear & Greed scoring system. If it translates to Extreme Greed (>75), it means retail investors are extremely bullish; if it translates to Extreme Fear (<25), it means the retail crowd is in deep despair.
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