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MOST PESSIMISM SINCE FINANCIAL CRISIS BEAR WAS ENDING - AAII

Individual investor pessimism over the short-term outlook for U.S. stocks jumped in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, optimism and neutral sentiment declined.

AAII noted that most of this week’s survey responses were captured before President Trump’s tariff announcement on Wednesday, April 2.

Meanwhile, more than half of investors surveyed said they are currently not holding gold or other precious metals in their portfolio.

AAII reported that bearish sentiment, or expectations that stock prices will fall over the next six months, gained 9.8 percentage points to 61.9%. Bearish sentiment is "unusually high" and is above its historical average of 31.0% for the 18th time in 20 weeks. This is the third-highest bearish sentiment reading in the history of the survey and was last higher on March 5, 2009 (70.3%).

The S&P 500 index's .SPX Financial Crisis intraday low occurred on March 6, 2009. Its 2007-2009 bear market decline of 57% ended on March 9, 2009 on a closing basis.

Additionally, of note, this is also the sixth week in a row bearish sentiment has been above 50%. The longest streak in the history of the survey with consecutive bearish sentiment prints above 50% was a seven-week run around the time the SPX ended its Gulf War decline of 19.9% on a closing basis in October 1990.

Bullish sentiment, or expectations that stock prices will rise over the next six months, fell 5.7 percentage points to 21.8%. Bullish sentiment is "unusually low" and is below its historical average of 37.5% for the 12th time in 14 weeks.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, declined 4.1 percentage points to 16.3%. Neutral sentiment is "unusually low" and is below its historical average of 31.5% for the 37th time in 39 weeks. Neutral sentiment was last lower on April 1, 2020 (16.0%).

With these changes, the bull-bear spread slid 15.4 percentage points to –40.2% from –24.7% last week. The spread is below its historical average of 6.5% for the 13th time in 15 weeks.

In this week's special question AAII asked its members if they hold gold or other precious metals in their portfolio, either directly or through an exchange-traded fund (ETF).

Here is AAII's graphic showing how they responded:

(Terence Gabriel)

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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:

U.S. STOCK FUTURES RATTLED AFTER CHINA RETALIATORY TARIFFS, PAYROLL DATA - CLICK HERE

DON'T FORGET ABOUT PAYROLLS - CLICK HERE

BANKS LEAD EUROPEAN SHARES LOWER, STOXX SET FOR BIGGEST WEEKLY FALL IN THREE YEARS - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES EDGE DOWN AFTER THURSDAY'S SHARP SELL-OFF - CLICK HERE

WALL STREET HAS MOST TO LOSE FROM TRUST LOST - CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)