Time Frame: Long-Term | Update Schedule: Weekly | Source: AAII
Construction:
The AAII (American Association of Individual Investors) is a non-profit organization headquartered in Chicago, and was founded in 1978. Their stated mission is: "assisting individuals in becoming effective managers of their own assets through programs of education, information, and research." It is affiliated with NAIC, the organization that helped so many investment clubs get started in the late 1990's.
Their niche market is individual investors, and not professional traders, pension funds, or anything else institutional. Their focus, and the focus of the great majority of their membership, is long-term fundamental analysis of sound companies using a very minimal amount of technical analysis for decision-making purposes.
The AAII sentiment survey is a weekly poll conducted by that organization which intends to gauge the overall sentiment of their membership. They ask their membership where they think the market will be in six months, and group the responses into three categories: bullish, bearish or neutral.
This indicator is a Bull Ratio, calculated by:
BULL RATIO = (BULLS / (BULLS + BEARS))
Like most contrarian indicators, when the survey shows too many investors as being bullish, it very often corresponds to market highs. Conversely, too many bears suggest that the market may soon find a low
