Retail bearish sentiment hits a multi-year record, and under this gloomy backdrop, new opportunities may emerge in U.S. stocks

Odaily Planet Daily News: Retail bearish sentiment has hit a new multi-year record, while institutional positioning lags even further behind. As U.S. equities face an unprecedented disconnect between fundamentals and capital flows, analysts predict a rare "Wall Street expectation gap" is now underway. Last week, the S&P 500 index posted a cumulative gain of 22% since late March and broke through the 7,700-point mark for the first time in history. As investors digested the latest batch of earnings reports, the benchmark index closed roughly flat on Monday.

Strategists at 22V Research have observed a notable divergence between the AAII Bull-Bear Spread and the firm's proprietary economic data index, which tracks a range of U.S. macro data releases. According to the firm's model, the current valuation deviation implies that the S&P 500 will rise by 1.6%, 5.1%, and 7.8% over the next one, three, and six months, respectively.

Dennis DeBusschere, President and Chief Market Strategist at 22V Research, wrote in a note to clients: "The current reading of investor sentiment relative to economic data suggests market returns will be above normal levels."

Alastair Pinder, Global Equity Strategist at HSBC, also noted that the many macro concerns that have emerged over the past few weeks have indeed given investors ample reason to question the current stock market rally.