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The market's recent downdraft is taking its toll on investors. The

American Association of Individual Investors

(AAII) sentiment survey released on Thursday morning indicates that investors are beginning to throw in the towel as the market moves lower, suggesting that investors may not be able to withstand the turmoil of the market much longer. Bullish sentiment fell to its lowest level since Oct. 15, 1998. Interestingly, the low bullish sentiment in October 1998 was recorded at the peak of the turmoil in Asia ("Asian Contagion") and just as the stock market in the U.S. reached a bottom. Bearish sentiment, meanwhile, shot up in the latest period, coming in at 38.6%. Investors who consider themselves neutral fell from last week to 35.1%.

This week's high bearish sentiment and low bullish reading will be seen as good news to investors who follow the AAII sentiment survey. The survey's low bullish sentiment might be seen as a sign of despair by those who watch this survey closely. Investors typically turn the most bearish (and least bullish) at market bottoms (as they throw in the towel) and turn the most bullish (and least bearish) at market tops (when investors believe that the good times will continue forever).

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