Retail Short Selling Ratio in US Stocks Rises to 53%, Institutions Say Near Rebound Zone

On September 20, as oil prices rose and US Treasury yields climbed, the bearish sentiment among individual investors in US stocks significantly increased. The latest weekly survey from the American Association of Individual Investors (AAII) showed that about 53% of respondents are bearish on the performance of US stocks over the next six months, up approximately 14 percentage points from the previous week, marking the highest level since May 2025. The proportion of bullish investors dropped to below 29%, a decrease of about 10 percentage points in a single week, the lowest in about a year. The rise in crude oil prices and the 10-year Treasury yield remaining around 5% have become major concerns for individual investors. Keith Lerner, Chief Investment Officer at Truist Wealth, stated that the level of pessimism in the AAII survey is approaching levels typically associated with market lows. Currently, only about 30% of the constituent stocks are above their 50-day moving average, and if this percentage falls below 30%, it could indicate that the market is entering an oversold state. CNN's Fear and Greed Index has shifted from "Greed" a month ago to "Fear." Peter Boockvar, Chief Investment Officer at One Point BFG Wealth Partners, cautioned that investors should not overinterpret sentiment indicators, and that professional investors are more optimistic. He believes that based solely on the contrarian indicators from AAII, the current market conditions are conducive to a rebound. Lerner also believes that investors should not stop buying due to short-term sentiment indicators, as the potential upside of the current long-term bull market still outweighs the downside risks, and the recent pullback in tech stocks could provide entry opportunities.

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