I spent the weekend at the Hertfordshire County swimming championships, watching my daughter race — and it was the perfect contrast to January in the UK: cold and rainy outside, but boiling hot inside the pool hall. Loud, exciting, and everything decided by tiny margins. Markets feel a bit like that right now.
After last week’s Buy-Side Sentiment Tracker, this Heatmap update is a useful cross-check — and it’s broadly consistent: sentiment is grinding more bullish, but still best described as cautiously optimistic rather than euphoric. The average Risk-On / Risk-Off reading is around the 63rd percentile: supportive for risk if macro holds up, but not yet in the “sentiment becomes a major headwind” zone.
Top 3 This Week
- Sentiment: Grinding more bullish — still best described as cautiously optimistic
- AAII: Most bullish in over a year, but still consistent with average equity returns
- Gold & Silver: Prices are rallying, but sentiment indicators are less extreme than you’d expect
Sentiment Overview
- Overall sentiment is drifting more bullish and sits near the upper end of the last six months’ range. Still: moderately bullish / cautiously optimistic — below the sentiment ranges seen in 2024, 2021/22, and the pre-pandemic period.
- This remains supportive for risk assets as long as macro conditions stay constructive — consistent with the grind-higher equity pattern and broadly average returns.
- The average Risk-On / Risk-Off Heatmap indicator is at the 63rd percentile: clearly bullish, but not “one-way” positioning. Historically, this zone has been linked to slightly below-average 12-month returns; sentiment becomes a clearer headwind above ~70.
- AAII Bull-Bear is the most bullish in over a year: +21% net bullish (bulls minus bears). That sounds punchy, but it’s “only” the 79th percentile — not a level that has reliably marked market tops. Historically, this zone has been followed by slightly above-average 12-month returns. Bigger red flags tend to appear above ~35% net bullish.
- Other surveys are already hotter than AAII:
- Investors Intelligence: 91st percentile
- NAAIM Exposure: 92nd percentile
- Extremes are starting to skew more bullish:
- Bullish (>90th percentile): 14 indicators
- Bearish (<10th percentile): 6 indicators
Equity Sectors
- Most bullish: Technology
- Most bearish: Health Care