LIVE MARKETS-Individual investor bulls advance, bears retreat - AAII

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INDIVIDUAL INVESTOR BULLS ADVANCE, BEARS RETREAT - AAII

Individual investor optimism over the short-term outlook for U.S. stocks took increased in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, pessimism took a sharp step back, while neutral sentiment edged up.

Meanwhile, about three-quarters of investors surveyed believe the Fed's decision to keep rates unchanged at its recent meeting was "the right move."

AAII reported that bullish sentiment, or expectations that stock prices will rise over the next six months, advanced 6.5 percentage points to 35.9%. Bullish sentiment is below its historical average of 37.5% for the 18th time in 20 weeks and is above 30% for only the sixth time this year.

Bearish sentiment, or expectations that stock prices will fall over the next six months, retreated 7.1 percentage points to 44.4%. Bearish sentiment is still "unusually high" and is above its historical average of 31.0% for the 24th time in 26 weeks.

However, this is the first week in 12 that bearish sentiment has not been above 50%. The recent 11-week stretch was the longest period over 50% in the survey’s history.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, added up 0.6 percentage points to 19.7%. Neutral sentiment is "unusually low" and is below its historical average of 31.5% for the 43rd time in 45 weeks.

With these changes, the bull-bear spread increased 13.6 percentage points to –8.5% from -22.1% last week. The bull-bear spread is below its historical average of 6.5% for the 19th time in 21 weeks.

In this week's special question AAII asked its members what they thought about the Federal Reserve's decision to keep interest rates unchanged at its May 6-7 meeting.
Here is AAII's graphic showing how they responded:

(Terence Gabriel)

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