almost 3 years ago • 1 min
Smaller investors in the US are the most optimistic since January 2018, according to a widely followed weekly survey from the American Association of Individual Investors (AAII).
The blue line on the chart shows how the AAII’s bull-bear spread – the number of individual investors who think stocks will rise over the next six months, minus the number who think they’ll fall – has climbed since the start of February.
However, before you get too excited, plenty of investors consider this bull-bear spread to be a contrarian indicator that people in the market are becoming too optimistic – and hence stocks might face some weakness.
As the vertical green line shows, the last time the bull-bear spread was this elevated, the benchmark S&P 500 index of US stocks (shown in pink) peaked a couple of weeks later, before dropping nearly 10% through March 2018.
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