One of the primary arguments coming out of the bear camp these days is the stock market game is just too easy right now. Our furry friends suggest that when things become too one-sided for an extended length of time (such as this being the longest period in history without a 3% correction), the tide can quickly turn.

The focal point to this argument has to do with investor sentiment. And based on the indicators I review on a regular basis, sentiment has indeed reached bullish extremes. For example, the reading of one crowd sentiment model I follow currently stands at 73.5. Although the model reading has been near this level twice already this year, it is important to note that (a) this week’s reading is the highest of the year and (b) in the last fifteen years, there have only been two readings that were higher.

Another example that this market is beginning to be “loved” instead of “hated” is the level of margin debt investors hold. According to the Wall Street Journal, investors held $559.6 billion in margin debt at the end of September. This level is a record high (the 7th such record set this year) and is up 14% from the end of 2016. As the Journal points out, higher levels of margin debt can be seen as a measure of confidence in the current market.

There are lots of other indicators to confirm the view that sentiment toward stocks has bee moving up strongly.  For example, in the latest survey of consumer sentiment done by the University of Michigan, the reading for the “outlook for the stock market one year from now,” hit an all-time.

Next up is the confidence level of newsletter writers. While I can certainly argue that the newsletter game has experienced a meaningful decline over that last decade, analyzing the spread between bullish and bearish writers still has value in the sentiment department. As of last Wednesday, Investors Intelligence reports that 64% of newsletter writers were currently bullish while just 14% were bearish.

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