Last week’s pattern continued: equities made new all-time highs, but sentiment moved sideways.
Across our range of indicators, we still see only slightly bullish sentiment overall — and no sign of broad euphoria outside a few narrow pockets.
That is the theme at the moment. The rally has been narrow, and so has the bullishness.
Tech has done most of the heavy lifting. The rest of the market, and cyclical assets in particular, have not seen the same steep gains.
That divergence shows up clearly in sentiment. Our broad Risk-on / Risk-off indicators show only moderate bullishness, while Tech sector indicators are moving back towards historically extreme bullishness.
Our Quick Risk-on / Risk-off aggregate, which uses only daily and weekly inputs, has been around the 60th percentile for three weeks now. That means investors are net bullish, but still well below the pre-war peaks — and below the levels that have historically been followed by below-average equity returns with a high hit rate.
The slower-moving Risk-on / Risk-off aggregate, which includes more monthly inputs, tells a similar story. The average indicator is at the 59th percentile.
Both readings are consistent with average equity market returns over the next 6–12 months.
Bottom line: sentiment is slightly bullish, but not stretched enough to send a strong warning signal. Bullishness is as concentrated as performance has been: this is still mainly about Tech and secular growth.
New this week: this update includes indicator quality scores and historical buy and sell thresholds in the Equity Factor Heatmaps. If factor investing is your thing, have a look — and also check out the updated Chart Packs.
Top 3 This Week
1. Sentiment: slightly net bullish, but far from yellow flags.
Broad investor sentiment has improved, but it is not stretched. Tech remains the clear exception.
2. Tech: by far the most bullish area in equities.
No other sector, region or factor is close. That creates vulnerability — arguably both to an economic slowdown and to an economic acceleration.
3. Commodities: bullishness is broadening out.
Commodity sentiment was bifurcated for a long time. That is starting to change, with bullishness spreading into soft commodities. The Agri SMA has moved from the 10th to the 40th percentile.
Sentiment Overview
- Weekly surveys have drifted more bullish, but none are at historical buy or sell thresholds.