LIVE MARKETS-Individual investors most pessimistic since early-November 2023 - AAII

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INDIVIDUAL INVESTORS MOST PESSIMISTIC SINCE EARLY-NOVEMBER 2023 - AAII

Individual investor pessimism over the short-term outlook for U.S. stocks jumped to a more than one-year high in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, both optimism and neutral sentiment fell.

Meanwhile, a little over half of investors surveyed believe stocks are, in general, "overvalued."

AAII reported that bearish sentiment, or expectations that stock prices will fall over the next six months, advanced 8.8 percentage points to 42.9%. Bearish sentiment is "unusually high" and is above its historical average of 31.0% for the 10th time in 12 weeks.

Bearish sentiment was last higher on November 2, 2023 (50.3%). (Of note, back then, just four trading days earlier, the S&P 500 index .SPX had ended a 10.3% correction on a closing basis).

Bullish sentiment, or expectations that stock prices will rise over the next six months, declined 7.6 percentage points to 33.3%. Bullish sentiment is below its historical average of 37.5% for the fourth time in six weeks.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, dipped 1.2 percentage points to 23.8%. Neutral sentiment is below its historical average of 31.5% for the 29th time in 31 weeks.

With these changes, the bull-bear spread collapsed 16.5 percentage points to –9.5% from 6.9% last week. The bull-bear spread is below its historical average of 6.5% for the fifth time in seven weeks.

In this week's special question AAII asked its members how they would characterize the current valuation of stocks.

Here is AAII's graphic showing how they responded:

(Terence Gabriel)

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