Extremely Stretched Sentiment: S&P Positioning Is The “Most Extended Ever”

Over the past few days, we dedicated a lot of time to discuss the recent reversal in market sentiment, from extremely bearish to bullish, optimistic and even momentum-chasing euphoric, and how the outcome is a market that is extremely stretched, with all relative strength and momentum indicators exploding into to the stratosphere (see “The Nasdaq Is Off To Its Best Start Ever, But Folks Are As Long As They Have Been All Year”, Panic Buying Flips Discretionary Investors From Under To Overweight; “Extreme Greed”: A “Prescient Signal Of A Durable Economy” Or A Giant Bull Trap).

Today, Goldman trader John Flood picks up on this and in a note that doubles down as the bank’s “Chart of the Day” (available to pro subs in the usual place), writes that Goldman’s Equity Sentiment Indicator is now at its highest level since 4/9/2021, suggesting positioning is now extremely stretched (“readings of +1.0 or higher have historically signaled stretched equity positioning”). The Sentiment Indicator (SI) is a measure of aggregate positioning and risk sentiment in the US equity market…