FXT Investments today analyzes the polarization of the US stock market

After a tumultuous summer for US equities, some retail investors have thrown in the towel, while many institutional investors have seen the recent slump as a buying opportunity.

The American Association of Individual Investors (AAII) 's closely watched retail investor confidence survey data shows that,The proportion of retail investors who are bearish on U.S. stocks exceeds those who are bullish for the first time since JuneThe retail investor bull-bear sentiment spread was -3.6 for the week ended August 24. Just before this month's market turmoil, retail investor optimism hit its highest level since April 2021 last month.

It's not just the survey that reveals new pessimism. As the S & P 500 fell in August, according to Bank of America,Retail investors have fled the U.S. stock market for two consecutive weeksBy contrast, institutions and hedge funds pumped $4.40 billion into U.S. stocks last week, the biggest inflow in two months.

Trading activity tracked by JPMorgan also showed that retail investors sold $1.40 billion worth of a single stock in the past week, the fifth consecutive week of net sales. But despite the overall bearish mood, they bought Nvidia shares ahead of the company's earnings and bottomed fishing Apple shares, which have fallen for days.

As investors turned their attention from Nvidia's blowout results to Federal Reserve Chairperson Jerome Powell's upcoming speech at the Jackson Hole Global Central Bank Annual Meeting, the S & P 500 reversed earlier gains on Thursday and ended up down more than 1 percent.

While U.S. stocks are still struggling to recover from this month's decline, most on Wall Street say the pullback comes as the market overheatsFXTInvestors take this as a foregone conclusion, and some are even waiting for bargains to buy sold stocks.

FXT Investments said,A further decline in the S & P 500 to 4,200-4,300 could be an attractive re-entry pointHSBC Holdings strategist Max Kettner is waiting for a fresh sell-off to increase the company's exposure to U.S. stocks.

The proportion of retail investors in the AAII survey who held a bearish view on U.S. stocks over the next six months rose from 30.1% to 35.9%, while the proportion of investors with a bullish view fell from 35.9% to 32.3%, and the proportion with a neutral view fell from 34% to 31.8%.