The National Association of Independent Investment Managers (NAAIM) weekly poll* shows that they are 83% long. This qualifies as an extreme level of optimism, and should cause concern.
On the following chart we can see that readings above 80% are not a magic number or an automatic sell signal; however, when sentiment reaches that level, we should begin looking for at least a brief correction. (Note that we have not identified every reading over 80% but have placed markers to provide points of reference.)
This spike of optimism comes as we are entering the September-October time period, the most seasonally negative two months of the year. We do not view this as a happy coincidence. . . .
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