The latest rally has pushed investor sentiment to its most bullish levels since the start of the year. For both of our Risk-on/Risk-off Aggregates, this is the first time bullishness has exceeded the levels seen before the war with Iran.
The optimism reflected in Year Ahead Outlooks coming into 2026 was still greater than what we register today. Back then, investors were looking for economic growth to broaden out alongside the prospect of an even more dovish Federal Reserve. But we are not far off those levels now.
Our high-frequency RoRo SMA stands at 63, while the all-in version is at 62. For historical context, the five-year high for both is just under 70, reached in 2024. The historical sell threshold — where the track record becomes more consistently associated with poor subsequent equity returns and a high hit rate — sits at 73.
So there is still some room before our indicators would independently urge greater caution.
Historically, current RoRo SMA levels have been associated with slightly below-average equity returns over the following year, with below-average returns occurring slightly more than half the time. No strong signal.
Nevertheless, investors are now clearly outright bullish — and that bullishness is becoming much less concentrated in small niches of the market.
Earlier in the year, we frequently highlighted that optimism was particularly focused on Technology and the wider AI ecosystem. That is much less the case today. Our Sentiment Matters Aggregates (SMA) for assets as broad as Cyclicals, Value and many commodities have also picked up significantly.
Top 3 This Week
1. Sentiment: Most Bullish Since Early 2026
Investor sentiment is clearly bullish and is now at its highest level since the optimism with which markets entered the year.
Having said that, there is still room for the sentiment indicators we track to rise further before they would send warning signals independently of the macro view.
2. Technology
For the first time since the most recent Tech rally, our SMA has dropped below the 90th percentile.
Not an extreme move by any stretch of the imagination, but a first step towards a healthier sentiment set-up.
3. Industrial Metals
The SMA has risen to the 96th percentile, with investors now the most bullish since February.
Sentiment Overview
The weekly surveys reflect the broader bullish shift in sentiment, but overall remain on the more cautious side.
- AAII Bull-Bear still registers slightly more Bears than Bulls, leaving it at only the 33rd percentile in terms of historical bullishness.
- NAAIM Exposure increased over the week, but remains close to the bottom of its recent range. At the 69th percentile, it is at most moderately bullish.
- Investors Intelligence continues to show the greatest degree of optimism. Although also off its recent highs, a reading of 32% net bullish places it at the 73rd percentile.
As always, the wide range of signals from these surveys highlights the importance of looking at the breadth of the data rather than simply selecting one favourite indicator.
Policy uncertainty is falling. The latest data show the lowest level of economic policy uncertainty since Donald Trump’s second inauguration.
That does not mean policy uncertainty has fully normalised, but the direction of travel has clearly been downward since the extreme highs following last year’s Liberation Day tariff announcements.
There are many sub-indices behind the headline EPU measure, and some of the detail is interesting. Much of the remaining policy uncertainty comes from components tracking the prevalence of uncertainty-related terms in news coverage. The indicators based on non-news data have already returned to their long-term mean of 100 and therefore no longer register elevated policy uncertainty.
US consumer bullishness on the stock market is spreading and rising. The Conference Board survey has been showing extreme bullishness for some time, but the New York Fed survey is now also picking up. It is registering the most bullish views on US equities since the post-pandemic and meme-stock optimism of 2021.
This has not historically been a particularly reliable sell signal, but it adds to the evidence that retail investors are becoming increasingly optimistic.