LIVE MARKETS-AAII pessimism rises as investors turn more cautious 

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AAII PESSIMISM RISES AS INVESTORS TURN MORE CAUTIOUS

Individual investors turned a bit more cautious in the latest American Association of Individual Investors (AAII) Sentiment Survey, with pessimism rising while both neutral views and optimism edged lower.

The survey also pointed to a continued reluctance to take on additional risk. Only about 5% of respondents, the smallest share, said they had recently become more aggressive.

Bearish sentiment, or expectations that stock prices will fall over the next six months, climbed 2.6 percentage points to 41.6%. The reading remains unusually high and marked a 36th straight week above its historical average of 31.5%.

Neutral sentiment, or expectations that stock prices will remain largely unchanged over the next six months, fell 1.1 percentage points to 19.7%. It remains unusually low and has now stayed below its historical average of 31.0% for 32 consecutive weeks.

Bullish sentiment, or expectations that stock prices will rise over the next six months, slipped 1.5 percentage points to 38.7%. Even so, optimism remains above its historical average of 37.5%, a threshold it has exceeded in four of the past seven weeks.

With bears outnumbering bulls once again, the bull-bear spread, a gauge of investor sentiment, fell to minus 2.9% from positive 1.3% a week earlier. The spread has now spent 13 consecutive weeks below its historical average of 6.5%.

In this week's special question, AAII asked its members how, if at all, they’ve changed their approach to investing lately.

Here is a graphic showing how they responded.

(Terence Gabriel)

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