6 November 2025
Overall sentiment has now returned to early-October levels. Our Sentiment Matters Aggregate (SMA) has risen to 62, its highest since the recent correction and close to the year-to-date high of 64. For context, the 2024 peak was 66, and the historical sell threshold sits at 73. Historically, sentiment in this zone has been followed by below-average 12-month equity returns.
For now, we are keeping the Sentiment Score at –1 (on our –3 to +3 scale). A few more strong days in equity markets would likely push the SMA to a new high and take the score to –2.
Tuesday’s market wobble sparked a search for an identifiable catalyst. The most commonly cited explanation was “AI valuation concerns,” which is another way of saying there was no real catalyst at all — just some digestion after a strong rally and short-term technical positioning effects. AI valuations may well be a source of underlying investor unease, but that is not new information and therefore not something that triggers sudden repricing.
High-frequency sentiment indicators, such as the VIX, moved on the day but remained nowhere near fear levels or anything close to historical buy signals.
At this stage, macro fundamentals remain broadly supportive, and while sentiment is clearly heating up, it is not yet so bullish to be the dominant driver of risk appetite.
We have four topics for you today. The Feature looks at the sentiment lessons we can take from the Tech earnings season. In this week's Quick Hits we highlight a sharp reversal in analyst views on Gold, Cash levels moving close to a historical sell signal and a reminder that raw margin debt levels are not a sentiment indicator — the market-cap-adjusted measure is what matters
Tech Sentiment: Strong, But Not (Yet) Excessive
Even with Tuesday's wobble, Tech has had a particularly strong couple of weeks, which is notable given how bullish sector sentiment already is and how much earnings news has been hitting the market. The way the sector has traded — despite lofty expectations and despite Meta’s poorly received results — tells us a few things:
- Sentiment is bullish, but not yet a barrier to outperformance. Elevated sentiment has not prevented stocks from rallying.
- Hype hasn’t outrun fundamentals. It takes strong results to satisfy investor expectations— but so far, companies have delivered.
- There is no room for error. Meta’s reaction was sharp. Bad news is still punished. This is healthy.
- Tech is not trading as a monolith. Investors are still differentiating between winners and losers. Meta’s miss didn’t drag down everything else, and strong prints from others didn’t rescue Meta.