From the desk of Willie Delwiche.
Key takeaway: The heat has been turned up on our sentiment indicators, and optimism is back to a full boil as we see indexes in the US and around the world move to new highs. While it takes bulls to have a bull market, sentiment running too far ahead of reality can be a recipe for some churn. While breadth remains strong and economic & earnings data comes in ahead of expectations, investor optimism may well be rewarded. If breadth falters in a meaningful way and/or incoming data starts to fall short of expectations, the overheated sentiment backdrop would pose an increased burn risk. Investors who can’t tolerate the heat might want to step out of the kitchen for a breath of fresh air.
Sentiment Report Chart of the Week: New Highs Across the Board
Large-cap US Indexes registered new, all-time highs last week as breadth slowly rebounds after a period of digestion. Optimism may be running hot, but at least it’s producing bull markets.