The latest “Charles Schwab Active Trader Sentiment Survey” polled more than 500 individual investors who trade frequently (at least 36 times per year). Of those, seven out of ten (71%) currently consider market volatility a friend, compared to 29% who view volatility as a foe.
Thirty-eight percent expressed a bullish outlook for the market in the next six months; up from 28% in the last survey published in April. Only 16% are bearish, compared to 21% in April. As bullish sentiment ticks up, traders are putting more money to work. Thirty-six percent of traders recently changed their portfolio allocation to include more cash, down from 43% in April.
However, only 14% of those surveyed say they are very confident that their portfolios are properly hedged against risk.
The study also found that nearly half (46%) of respondents report they are regularly trading options as a potential method of generating extra income. Ownership of foreign equities is also becoming more common. Fifty-six percent of active traders surveyed say they are exposed to foreign equities, predominantly through exchange-traded funds (ETFs) or American Depository Receipts (ADRs) of non-U.S. based companies.
Traders participating in the Schwab survey also show a clear preference toward technology stocks. Thirty-eight percent say they are now the most bullish on the technology sector, followed distantly by materials (17%), financials (12%), industrials (10%) and consumer discretionary (6%).