Direct Answer
The percentage of respondents in the weekly American Association of Individual Investors survey who say they expect stock prices to fall over the next six months. The other two answers are bullish and neutral. A high share of bears means individual investors are pessimistic, and many analysts read extreme pessimism as a contrarian sign that selling pressure may be near exhaustion.
AAII Bearish Sentiment: Formula, Meaning, Signals, Examples and How to Use It
How Is AAII Bearish Sentiment Calculated?
The percentage of respondents in the weekly American Association of Individual Investors survey who say they expect stock prices to fall over the next six months. The other two answers are bullish and neutral.
Formula: Bearish % = bearish responses / total responses x 100
Inputs:
- Weekly AAII member survey responses
- Count of bearish, neutral and bullish votes
Worked example. If 378 of 900 survey responses are bearish, bearish sentiment is 42.0%. The inputs are illustrative numbers, not market data.
Reading it. A high share of bears means individual investors are pessimistic, and many analysts read extreme pessimism as a contrarian sign that selling pressure may be near exhaustion. The long-run average bearish share is close to 31 percent, which gives a reference point for what counts as high or low.
Limits. It is a survey of a self-selected group of AAII members, not of all investors, and it records opinion rather than positions. Extremes can persist, and it is a sentiment gauge, not a timing tool.
What is AAII Bearish Sentiment?
The percentage of respondents in the weekly American Association of Individual Investors survey who say they expect stock prices to fall over the next six months. The other two answers are bullish and neutral.
How to use AAII Bearish Sentiment
A high share of bears means individual investors are pessimistic, and many analysts read extreme pessimism as a contrarian sign that selling pressure may be near exhaustion. The long-run average bearish share is close to 31 percent, which gives a reference point for what counts as high or low. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- A fixed question about six-month direction asked every week gives a consistent series, so changes come from answers rather than wording.
- The bearish share is bounded between 0 and 100 percent and reads directly as a fraction of respondents.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- Because the three shares sum to 100, a rise in bearish can come from neutral respondents moving rather than from bullish ones.
- Responses are gathered over a multi-day window, so late events in that week are only partly reflected.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is AAII Bearish Sentiment a buy or sell signal?
No. A high share of bears means individual investors are pessimistic, and many analysts read extreme pessimism as a contrarian sign that selling pressure may be near exhaustion. It is a survey of a self-selected group of AAII members, not of all investors, and it records opinion rather than positions. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for AAII Bearish Sentiment?
AAII Bearish Sentiment is computed from weekly AAII member survey responses; count of bearish, neutral and bullish votes, so the choices that matter are the data convention and the window it is read over. Test those across instruments, regimes and out-of-sample periods instead of fitting one historical winner.
Can AAII Bearish Sentiment be used by itself?
It is a survey of a self-selected group of AAII members, not of all investors, and it records opinion rather than positions. Extremes can persist, and it is a sentiment gauge, not a timing tool. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does AAII Bearish Sentiment work on every timeframe?
The calculation (Bearish % = bearish responses / total responses x 100) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does AAII Bearish Sentiment give false signals?
Because the three shares sum to 100, a rise in bearish can come from neutral respondents moving rather than from bullish ones. Responses are gathered over a multi-day window, so late events in that week are only partly reflected. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should AAII Bearish Sentiment be backtested?
Rebuild AAII Bearish Sentiment from weekly AAII member survey responses using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.