Individual investor bulls charge, bears cower -AAII

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Main U.S. indexes rise, but off highs: Nasdaq now up ~0.5%

Cons disc leads S&P 500 sector gainers; materials weakest group

Euro STOXX 600 index off ~0.1%

Dollar, crude up; gold, bitcoin slip

U.S. 10-Year Treasury yield rises to ~3.75%

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Optimism vaulted to a 19-month high in the latest American Association of Individual Investors (AAII) Sentiment Survey. With this, bearish sentiment plunged to a 19-month low, while neutral sentiment also fell.

AAII reported that Bullish sentiment, or expectations that stock prices will rise over the next six months, surged 15.5 percentage points to 44.5%. This puts optimism above its historical average of 37.5% for the first time since February 2023. Bullish sentiment was last higher on Nov. 11, 2021 (48.0%).

Of note, the Russell 2000 .RUT posted its record high close on Nov. 8, 2021, and the Nasdaq Composite .IXIC posted its record high close on Nov. 19, 2021.

Bearish sentiment, or expectations that stock prices will fall over the next six months, collapsed 12.5 percentage points to 24.3%. After a 15-week streak of above-average readings, bearish sentiment fell to its lowest level since Nov. 11, 2021 (24.0%).

Neutral sentiment, or expectations that stock prices will stay essentially unchanged over the next six months, declined 3.0 percentage points to 31.2%. Neutral sentiment is below the historical average of 31.5% for the fourth time out of the past 23 weeks.

With these changes, the bull-bear spread jumped to +20.2 percentage points from -7.8 percentage points last week. The bull-bear spread is at its highest level since Nov. 11, 2021 (24.0%).

In this week's special question, AAII asked its members what their perception is of the current condition of the housing market. Here are the responses:

Strong: 16.3%

Mixed: 55.2%

Weak: 22.9%

Not sure/No opinion: 5.2%

(Terence Gabriel)



Major U.S. stock indexes are higher early on Friday, with the Nasdaq .IXIC and technology-related shares extending the previous day's gains.

The Nasdaq is up 1%. The technology sector .SPLRCT and consumer discretionary .SPLRCD indexes are also up more than 1% in morning trading.

Shares of Tesla TSLA.O are up more than 5%, adding to their recent strong run, and General Motors GM.N is s up more than 3% amid expectations that Tesla's electric-vehicle charging system would become an industry standard after GM joined cross-town rival Ford F.N in agreeing to use the Tesla Supercharger network.

Investors are also gearing up for next week's inflation data and Federal Reserve meeting, where the Fed could decide to keep its policy rate unchanged for the first time since March 2022.

Here is an early market snapshot:

(Caroline Valetkevitch)



Flows into Europe tend to do best when economies are recovering fast from troughs, but there seems to be less scope of that, says Goldman Sachs (GS).

Following steep outflows from European equities last year thanks to the war in Ukraine, GS notes this year began with a short-lived shift back into Europe driven by declining energy prices and more optimism on domestic growth, supported by strong and sustained performances from sectors like luxury.

"But since mid-March we've seen outflows again; a contrast to the European bond market where we've seen investors return with more consistency through this year" - GS

GS also flagged concerns like the recent turmoil in the U.S. banking sector raising risk premium for European financials, and a soft batch of economic data out of China, to which Europe has maximum exposure.

Adding to troubles, GS notes markets have become concentrated in mega-cap firms exposed to AI, something Europe has minimal exposure to, further weighing on the continent's ability to attract investors.

For the UK specifically, equity outflows have continued to disappoint whereas bond flows have improved modestly.

Other than being plagued by the same issues as the rest of Europe, the analysts say that they are seeing relatively few IPOs, and that large cap companies continue to buy back shares, further adding to the pressure.

The result is a contraction in net equity supply worth about 2% of mega-cap per annum, bigger than that in the U.S.

(Shashwat Chauhan)



After collapsing more than 25% from its January 2022 record close into its October 2022 closing low, the S&P 500 index .SPX has made great progress in retracing its losses.

Indeed, on Thursday, the benchmark index ended at 4,293.93, or 20.04% above that October closing low.

In terms of recouping its losses, the SPX, with its 4,299.28 high this past Monday, has now retraced as much as 61% of the 2022 decline on an intraday basis.

With Thursday's close, the SPX is still down more than 10% from its January 2022 highs, and it is important to note that any market that retraces less than 100% of its prior swing is always considered counter-trend or a correction of the prior swing.

The index is nearing the next significant resistance in the form of the 61.8% Fibonacci retracement of the entire 2022 decline, at 4,311.69, and the August 2022 reaction high at 4,325.28:

This zone is only around 0.4%-0.7% above Thursday's close, so the index appears to be reaching another critical juncture.

In the event of a reversal, there is a weekly Gann Line now around 4,261, which descends to around 4,256 next week (Gann Lines are trend lines running at certain angles off significant highs and lows).

The next support is in the 4,203-4,155 area, which includes a number of previous highs since late-August of last year, the 100-week moving average, the 23.6% Fibonacci retracement of the March 2020-January 2022 advance, the 50% retracement of the January 2022-October 2022 decline, and the upper boundary of the weekly cloud.

Thus, if any weakness is going to prove to be just a modest pause in an ongoing recovery, traders don't want to see the index back below this zone.

In the event there is an explosive upside thrust next week, there will be a powerful weekly Gann Line intersection around 4,445. The 76.4%/78.6% Fibonacci retracements of the entire 2022 decline are in the 4,505-4,535 area.

(Terence Gabriel)




Fund flows: Global equities, bonds and money markets Fund flows: Global equities, bonds and money markets

Early mkt snapshot


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


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