As 2010 surpassed its half-way mark, just 50 percent of online investors said they believe the S&P 500 index will rise between 5-20 percent by year-end, down from 71 percent just three months ago, according to a late July survey of more than 300 investors conducted by online broker TradeKing (www.tradeking.com).

In addition, despite recent gains in the market, “neutral” and “bearish” positions increased over April figures, with 54 percent of traders describing themselves as “neutral or not sure,” up from 40 percent in April, and 21 percent describing themselves as “bearish” or “very bearish,” up from 17 percent in April.

Consistent with their more conservative market sentiment, investors also indicated taking more conservative measures at home. Sixty-one percent said they were trimming household budget spending for the year, up from 54 percent in April 2009 and 35 percent in January 2009. In addition, 62 percent reported cutting back on energy consumption, a figure that similarly rose from 56 percent in April 2009 and 33 percent in January 2009.

“As the year progresses, we’re starting to see confidence in the market’s yearly performance erode,” said Don Montanaro, Chairman and CEO of TradeKing. “Investor sentiment was tilting towards a strong bullish response in both the January and late April surveys, but now investors seem less sure about the final verdict on 2010. It appears investors are playing it close to the vest until stronger economic indicators take hold.”

Investors Look to Unemployment and Consumer Spending as Trading Signals; Pick Energy and Technology As Best Bets for Success over Next Three Months

Among those surveyed, 49 percent ranked U.S. unemployment claims as their top trade trigger to watch for the next three months, up slightly from 45 percent in April, followed by consumer spending with 44 percent of responses. The U.S. housing market came in third with 37 percent, and quarterly earnings fell from second place ranking in April to fourth with 33 percent of responses.

When asked to pick the best sectors for the next three months from a “long” position, respondents listed energy and technology as the overwhelming top picks, earning 49 percent and 45 percent of responses, respectively. The retail sector took top spot as having the most potential from a “short” position near-term, with entertainment, travel and transportation following closely behind.

“Interestingly, while many respondents say they are watching consumer spending as a key trade trigger, most indicate they are curbing their own household spending, which doesn’t particularly bode well for a return to bullishness in the near-term,” said Montanaro. “Similarly, they look to Energy as a key sector to perform well in the next quarter, but say they are taking steps to reduce their own energy consumption, which perhaps tells us they feel the state of global energy consumption will be strong enough to lift the sector in the short term.”