LIVE MARKETS-AAII sentiment improves, but bears still dominate

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AAII SENTIMENT IMPROVES, BUT BEARS STILL DOMINATE

Individual investors grew a bit more optimistic about the market's near-term outlook in the latest American Association of Individual Investors (AAII) Sentiment Survey, though sentiment remains far from bullish.

Bullish sentiment, which reflects expectations that stocks will rise over the next six months, climbed 2.0 percentage points to 34.6%. Even with the increase, it has remained below its long-term average of 37.5% in nine of the past 11 weeks.

Bearish sentiment eased 1.6 percentage points to 46.5%, while neutral sentiment slipped 0.4 percentage points to 18.9%.

Despite the improvement, pessimism remains elevated by historical standards. Bearish sentiment has now exceeded its long-term average of 31.5% for 34 consecutive weeks, while neutral sentiment is unusually low and has stayed below its historical norm of 31.0% for 30 straight weeks.

The bull-bear spread, a gauge of overall investor sentiment, improved to minus 11.9% from minus 15.4% a week earlier. Even so, the measure remains well below its long-term average of 6.5% and has stayed in unusually weak territory for 11 consecutive weeks.

Meanwhile, in this week's special question, AAII asked its members how they believe the November midterm elections will impact stock prices.

Investors were divided on how the elections might affect the market. Roughly one-third of participants, the largest single group, said they do not expect the elections to materially affect stock prices, while bullish and bearish views were relatively close, at 18% and 15%, respectively.

(Terence Gabriel)

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