More sentiment indicators are demonstrating excess optimism
The stock market's rally over the past 4 months has thusfar left bears in the dust. One of the earliest bearish factors in May was the Equity Put/Call ratio, which has historically low even 3 months ago. However, other sentiment indicators such as the Stock/Bond ratio, Advisor and Investor Model, and Risk Appetite Index dd not registered such extreme readings over the past few months.
That is now starting to change as more and more indicators register excessive optimism readings. The % of indicators showing excess optimism - the % of indicators showing excessive pessimism has climbed to 0.44 for the first time since the crash.
Similar historical extremes led to worse than random returns for the S&P over the next 2-3 months: