LIVE MARKETS-AAII bears tighten their grip
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BEARS TIGHTEN THEIR GRIP
Individual investors remained cautious in the latest American Association of Individual Investors (AAII) Sentiment Survey, with the outlook deteriorating from a week ago as bullish sentiment fell and bearish sentiment rose.
Bullish sentiment, or expectations that stock prices will rise over the next six months, fell 3.3 percentage points to 30.8% and remained below its long-term average of 37.5% for the third time in four weeks.
Neutral sentiment added 0.3 percentage points to 17.8%, but remained unusually low and well below its historical average of 31.0% for a 36th consecutive week.
Bearish sentiment gained 3.0 percentage points to 51.4% and is unusually high. It has exceeded its long-term average of 31.5% for the 40th consecutive week, underscoring the cautious tone among individual investors. Historically, elevated pessimism has often been viewed through a contrarian lens.
The bull-bear spread, a measure of overall sentiment, widened 6.3 percentage points to negative 20.6% from negative 14.3% last week. The spread reached its most negative reading since mid-September and is unusually low. It has remained below its historical average of 6.5% for 17 weeks in a row.
Despite the gloomy sentiment backdrop, nearly three-quarters of respondents to this week's special question said they do not currently plan to make any significant changes to their portfolios in response to the midterm elections.
(Terence Gabriel)
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