Sky-high optimism across the world

The stock market has mostly only gone in 1 direction since March: up. Since the various pullbacks along the way were very shallow, extremely optimistic sentiment never had a chance to properly wash out. As a result, sentiment across the world is now at sky-high levels.

For example, our Smart Money/dumb Money Confidence Spread is at -0.69, one of the lowest readings ever:

There were only a few comparable cases. While these historical cases didn't always lead to an immediate short term pullback, one has to wonder how long sentiment can remain this elevated:

What makes the Confidence Spread extremely low is Smart Money Confidence, which is even lower than where it was during the melt-up in January-February of this year:

Once again, this is a worrisome sign for stocks going forward:

Intermediate Term Optimism Index is also at one of the highest readings ever (83):

Moreover, the % of indicators showing excess optimism - % of indicators showing excess pessimism is extremely elevated (0.49):

It's not just sentiment in the U.S. that's high. This phenomenon has occurred all around the world. Taking an average Optix of Australia, Brazil, France, Italy, Mexico, Russia, Spain, & UK, and then applying a 10 day average leaves the following result:

This "average" Optix is at its 2nd highest reading ever. The highest was earlier this year during the initial post-lockdown rally. Even then global equities fell over the next week:

Breaking this down, Australia Optix's 10 dma is at 79:

Brazil Optix's 10 dma is at 79:

France Optix's 10 dma is at 83 (2nd highest reading ever):

Italy Optix's 10 dma is at 84:

Mexico Optix's 10 dma is at 82:

Russia Optix's 10 dma is elevated, but not as elevated as that of other countries:

Spain Optix's 10 dma is at 80:

UK Optix's 10 dma is at 83: