It's Not My Fault ...

It's theirs. In the 1990's I invented my own proprietary sentiment indicator and have religiously updated it every week for which the data was available. Luckily, the data source I used remained stable over that time, so no changes were required to the formulas or to the data sets used. Here is what the weekly data show in the chart below.

For 2026, the Weekly Bullish % now stands at 64.8% bulls, across a wide swath of investors from professionals to newsletter writers to small investors. It was not higher at any point in 2025. This level took a big 3-point jump in this past week, which is no small feat. And, in pure simple terms, investors as a collective group are now more bullish than they have been at what is labeled the "B Wave High" which is the 2007 stock market top, before the 2008-9 debacle. Can this measure go higher? It can. People can feel what they wish. And, certainly, sentiment is currently lower than the 68.9% registered at what is labeled the "Minor Wave 3 High" - just before the peak in 2018. Can sentiment go there? It can. Can it go higher than that? It can. Still, it should be clear from the data comparison that we are reaching rarefied air and that risks continue to abound.

Along with a simple percent bullishness, there used to be a sentiment indicator called The Magazine Cover Indicator, which was said to fire when a number of prominent magazines (Time, Newsweek, Barrons, etc.) featured bullish stock market stories on their covers. Of course, most of these magazines have now gone from print to on-line presence, both reducing the effectiveness of their impact and of that of the indicator. Still, we will note that the Time Magazine 2025 Person of the Year, was, of course A-I, as below on its cover.

And you know that just recently, possibly as a result, the A-I stocks (or a lot of the Mag7, anyway) have been flailing and not yet making new highs along with the rest of the market. How, could it be worse than this? 

Easy. 

Below is just a mere sampling of what you can see when you scour social media even slightly and think about what you are seeing and what they are presenting you with.

Apparently almost everyone is now a self-styled investment guru willing to teach you how make money in stocks or avoid fees, or how to live a comfortable retirement life. No problem, right? The kids in the upper left and lower left lived through major bear markets, right? Not.

So be cool. Be cautious. Be patient and be flexible. In the words of some of the old-timers on Wall Street, 'the boat is getting a little heavy on one side'. It's not my fault. It's theirs. I'm just showing some evidence. It happens almost every time. People get excited when they win or make a lot of money. And the opposite will be true at a bear market bottom.  Sentiment will decidedly go the other way - like the 25.3% bullish in the first chart which occurred at or near the "C Wave Low" of the 2009 bear market bottom.

And to be fair, there is a problem with sentiment. It often precedes a top (or a bottom). That means that even though opinions are getting stretched right now, it doesn't mean people will head for the exits tomorrow. But, like a passenger strapped in on a jet airplane, while you don't want to prematurely open the cabin door and jump, you might just want to amble around the plane a bit - like if you're surveying where the lavatories are - and at least check out how many exits there are, where they are located, and how they operate without being obvious, of course. Because nobody likes a fidgety seatmate. Right?

Tomorrow is not scheduled to be a cash stock market session as it is the MLK Holiday, although there may be some futures trading hours. Have an excellent rest of the day, weekend and holiday. 

TraderJoe