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INDIVIDUAL INVESTOR BULLS STEP BACK, BEARS ADVANCE - AAII

Optimism and pessimism among individual investors about their short-term outlook for the U.S. stock market moved back into their typical ranges in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, neutral sentiment increases slightly.

Meanwhile, about half of investors surveyed said their portfolios performed better than they expected in 2023 vs their expectations at the start of the year.

AAII reported that bullish sentiment, or expectations that stock prices will rise over the next six months, fell 6.6 percentage points to 46.3%. Optimism is back in its typical range for the first time in three weeks. Bullish sentiment is above its historical average of 37.5% for the eighth consecutive week.

Bearish sentiment, or expectations that stock prices will fall over the next six months, rose 4.2 percentage points to 25.1%. Pessimism is back in its typical range for the first time in three weeks. Bearish sentiment is below its historical average of 31.0% for the eighth consecutive week.

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, gained 2.4 percentage points to 28.6%. Neutral sentiment is below its historical average of 31.5% for the fourth consecutive week and the 12th time in 13 weeks.

With these changes, the bull-bear spread tumbled 10.8 percentage points to 21.3% vs roughly 32% last week. The spread is above its historical average of 6.5% for the eighth consecutive week.

In this week’s special question, AAII asked its members how their portfolios performed this year relative to their expectations at the start of the year.

Here are their responses:

Much better than I expected: 19.6%

Better than I expected: 46.9%

Close to what I expected: 23.0%

Worse than I expected: 8.8%

Much worse than I expected: 1.4%

(Terence Gabriel)

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