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INDIVIDUAL INVESTOR BULLS AND BEARS SEE SOME EYE POPPING MOVES - AAII

Individual investor pessimism over the short-term outlook for U.S. stocks rocketed in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, optimism and neutral sentiment tumbled.

Meanwhile, a little over half of investors surveyed describe the current state of the U.S. economy as "mixed."

AAII reported that bearish sentiment, or expectations that stock prices will fall over the next six months, surged 20.2 percentage points to 60.6%. Bearish sentiment is "unusually high" and is above its historical average of 31.0% for the 13th time in 15 weeks. Bearish sentiment was last higher on September 29, 2022 (60.8%), and was "the seventh-highest reading in the survey’s history."

Of note, the 60.8% reading on September 29, 2022 occurred nine trading days (tds) prior to the end of S&P 500 index's .SPX 2022 bear market on October 12, 2022. The SPX sold off more than 25% on a closing basis in that decline.

(At this time, the SPX ended Thursday down just 4.64% from its February 19 record closing high).

Bullish sentiment, or expectations that stock prices will rise over the next six months, fell 9.8 percentage points to 19.4%. Bullish sentiment is "unusually low" and is below its historical average of 37.5% for the seventh time in nine weeks. Bullish sentiment was last lower on March 16, 2023 (19.2%), and was among "the lowest 65 readings in the survey’s history."

The 19.2% reading on March 16, 2023 occurred just 3 tds after the S&P 500's Silicon Valley Bank panic low. The SPX had sold off nearly 8% from its early-February 2023 high on a closing basis.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, slid 10.3 percentage points to 20.0%. Neutral sentiment is "unusually low" and is below its historical average of 31.5% for the 32nd time in 34 weeks. Neutral sentiment was last lower on September 29, 2022 (19.2%).

With these changes, the bull-bear spread collapsed about 30.0 percentage points to around –41% from around –11% last week. The bull-bear spread is the most negative it's been since September 2022, and is below its historical average of 6.5% for the eighth time in 10 weeks.

In this week's special question AAII asked its members how they would describe the current state of the economy.

Here is AAII's graphic showing how they responded:

(Terence Gabriel)

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