The AAII bull-bear ratio is approaching contrarian extremes.

Investing.com -- Wall Street investors are closely monitoring the S&P 500 for potential recovery as investor sentiment declines. A key indicator tracked by the American Association of Individual Investors, the bull-bear ratio, fell to 0.3 in the week ending Wednesday, marking the lowest level since September 2022.

The decline in the bull-bear ratio signifies a decrease in optimism among investors, which could lead to a drop in stock purchases. Historically, such low levels of the bull-bear ratio have been associated with bear market lows in U.S. stocks. Therefore, periods of low investor sentiment indicated by this ratio often coincide with opportunities for stock price recoveries, suggesting that Wall Street investors may be eyeing a potential rebound in the S&P 500 amid a pessimistic outlook.