Sky high tech sentiment
Sentiment towards tech stocks is sky-high. Our XLK Optix's 50 day average is at the highest level since the dot-com bubble. Newly initiated traders must be having a blast, especially if they've only been trading since the end of March.
The last (and only) time tech optimism was this extreme was near the peak of the dot-com bubble. Back then, XLK surged another 21% over the next 3 months before the tech bubble burst:
Here's XLK's returns on different time frames:
In the meantime, AIM (a model consisting of sentiment readings from several advisor and investor surveys) has rebounded from extreme pessimism readings:
When AIM cycled from extreme pessimism to average-readings, the S&P's returns dropped off around the 1 month forward point, but were mostly bullish for stocks over the next year.
And for what it's worth, the % of S&P 500 members with a MACD sell signal in the past 10 days is at its highest level ever:
Readings for the NASDAQ 100 is at its 2nd highest level ever:
Although this indicator is popular, it's not usefulness is somewhat questionable (see here and here).