Sentiment Ideas - 23 October 2025
Bottom lines
- Equities are back to the highs, but Sentiment isn’t.
- Tech is heading into the reporting season with the most bullish sentiment in eight years.
Sentiment View
Before diving into the main course of today’s two topics, here’s a quick look at where sentiment currently stands.
Equities are back to the highs, but Sentiment isn’t.
The key takeaway is that while the S&P 500 has digested its recent pull-back and returned to previous highs, sentiment hasn’t made the same full recovery.
That’s not unusual. Sentiment typically resets quickly during market declines but rises more slowly as prices recover. The second climb back to what used to be an all-time high rarely feels as exciting as the first. It often takes time — and a meaningful new high — to push sentiment back above previous peaks.
Our Risk-On/Risk-Off Sentiment Matters Aggregate captures this dynamic well. Sentiment is bullish, but not extreme. At readings in the mid-to-high 50s, the indicator remains well below its early-October and 2024 peaks.
On our -3 to +3 scale, I would rate sentiment at about –1 — a mild headwind to a continued rally, but not a dominant driver of the broader investment outlook.
Tech Sentiment at an Eight-Year High
Tech has driven equity markets for what feels like forever. With outperformance and re-rating come higher expectations — and the upcoming earnings season will be a reality check for whether results can keep pace with those expectations.
Why it matters: Tech is heading into the reporting season with the most bullish sentiment in eight years.
Sentiment and positioning offer a useful lens for assessing risk around major news events like earnings season. When sentiment is bullish, investors’ expectations are high, making markets more sensitive to disappointments in earnings or guidance. Conversely, bearish sentiment can cushion the reaction to bad news.
Before the flood of company-level data arrives, let’s take a look at where Tech sentiment stands as we enter earnings season.