Sentiment Update: Confidence Is Improving, But Euphoria Is Still Missing
Investor sentiment continues to recover from the fear-driven conditions seen earlier this year. While professional money managers remain heavily invested and market internals continue to strengthen, individual investors remain surprisingly cautious.
The result is a market environment that appears constructive rather than speculative.
Sentiment Composite Index
Current Score: 64.4
Emotion Label: GREED
Emotion Scale
Score Range | Emotion |
|---|---|
0–20 | Extreme Fear |
20–40 | Fear |
40–60 | Neutral |
60–80 | Greed |
80–100 | Extreme Greed |
The composite remains in the Greed zone, reflecting improving confidence and stronger market momentum. However, the reading remains well below the levels typically associated with widespread euphoria.
What the Indicators Are Saying
Bullish Factors
NAAIM Exposure Index remains near maximum bullish levels at 98.39
The VIX has fallen below 18, indicating a significant decline in fear
The equity put/call ratio remains low, suggesting reduced demand for downside protection
The weekly RSI has recovered to 65, confirming improving market momentum
More Cautious Factors
The AAII Bull-Bear Spread remains deeply negative at -17.3
CNN Fear & Greed remains in Fear territory at 34
This creates an interesting divergence. Institutional investors remain highly invested while individual investors continue to show considerable skepticism.
Historically, major market tops tend to occur when both groups become highly optimistic. That is not the case today.
Breadth Remains Supportive
Sentiment alone rarely tells the entire story. Breadth and participation continue to provide important confirmation.
NYSE Stocks Above Their 50-Day Moving Average
NYA50R: 56.94%
This indicates that a majority of stocks remain above their intermediate-term trend.
Current Interpretation
Reading | Interpretation |
|---|---|
Above 50% | Healthy participation |
Above 60% | Strong participation |
Above 80% | Potentially overheated |
At 56.94%, breadth is constructive but far from excessive.
Equal Weight Leadership
One of the most encouraging developments is that the Equal Weight S&P 500 (RSP) has moved to a new all-time high and is outperforming the traditional S&P 500.
This suggests:
Leadership is broadening
More stocks are participating in the advance
Market concentration is decreasing
The average stock is performing well
Healthy bull markets typically exhibit this type of broad participation.
Advance-Decline Trend
The NYAD 3/15 EMA remains positive, indicating:
Advancing stocks continue to outpace declining stocks
Accumulation remains intact
Internal momentum remains favorable
No significant signs of broad distribution
Bottom Line
The Sentiment Composite remains in the Greed zone, but the overall message is not one of excessive optimism.
More importantly, the breadth backdrop remains constructive:
NYA50R remains above 50%
NYAD continues to trend positively
Equal-weight stocks are outperforming
Market participation is broadening
Taken together, the evidence suggests a healthy bull market rather than a late-stage speculative environment.
While sentiment has improved considerably from earlier fear readings, the market is not yet displaying the type of widespread optimism and deteriorating internals that typically accompany major market tops.
Current Assessment
Constructive Bull Market with Broadening Participation.