The most recent sentiment survey by discount broker Charles Schwab found that U.S. stock investors are becoming more pessimistic about the market.
The survey showed that bearishness among retail investors reached 20 percent, a 10 percent increase from December. Despite the rising note of caution, however, thirty eight percent are still bullish, while 42 percent are neutral, according to the survey.
Individual investors are most bullish on technology and the health-care sectors and most bearish on utilities and consumer goods, the survey found.
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"Our outlook for 2014 still remains favorable, as we do not see the signs that the bull market reached its top," Randy Frederick, managing director for active trading and derivatives at Schwab, said.
But he also warned that stocks are ready for a classic correction.
Another sentiment survey by the American Association of Individual Investors found that bearishness was at 26 percent for the week ending March 19.
March 19 was also the day Federal Reserve Chairwoman Janet Yellen made comments suggesting that there would be increases in interest rates as early as six months away.
Data from Lipper shows that money flowing into equity mutual funds has been growing, but not at the levels seen when stocks peaked in late 2007.
"The vast majority of retail investors who left the stock market in droves after the crash of 2008 have not come back yet and are holding cash," Schwab's Frederick said.
A recent TNS survey for Wells Fargo also found that a third of all investors are still "wary" of stocks because of the dotcom crash and the financial crisis.
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