Is Sentiment Giddy Yet? It’s Complicated.
Let’s examine some key sentiment measures.
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Are we giddy yet? We’re certainly giddy in tech, but when breadth is so tepid, we are not overall giddy everywhere all at once.
Like, do you think the folks who were so ramped up about owning banks as we entered the year are giddy? The Bank Index is flat on the year; does that make one giddy? I doubt it.
But I want to begin with the chart of Intel. I have said I didn’t think the SOX was parabolic, but some of the components, namely Intel, were. This weekend, Barron’s had a cover story on the semis and called them parabolic. But don’t you fret, they found some for you to buy anyway!
The base Intel (INTC) emerged from last fall was fabulous. It had been building a base for a year, traveling back and forth between 28 and 18 the entire time, having gapped down in August of 2024. Then wham! It not only breaks out in September of 2025, it does so on a gap, leaving that entire base behind. That was an island; you can see the two bodies of ‘water’ (the gaps) on either side between (roughly) 25 and 30. Islands are bullish when the break is to the upside. They are bearish when the break is to the downside.
It was a gradual rise until April of this year, when it literally tripled in a matter of weeks (thus my call it had gone parabolic). But now I’d like you to notice how the stock peaked in early May and in the last half of the month could not better that peak (a lower high).
When we have talked about the SOX or even as I highlighted Micron recently, I have said, if you want to be bearish, you need a failing rally (lower high) or a gap down that leaves an island overhead. Notice Intel now has a failing rally. And on Friday, it created an outside day. An outside day is when the high of today and the low of today are higher and lower than the prior day.
I rarely put much stock in an outside day—I have seen them work and not work– but when it happens at a lower high in stock I already think of as having gone parabolic, I take notice, and I think you should too. Intel looks vulnerable to me.
Now, on the sentiment front, there were a few changes last week. First, the NAAIM Exposure lifted to just over 98, which is the area it has peaked (as has the S&P) in the last several months. Over 100 and they are on margin (definitely giddy at that point).
Then there is the put/call ratio, which fell to .64 on Friday. That is the lowest reading since the heady days of early 2021. I probably do not need to remind folks about early 2021 when we had Meme-Maina and SPAC-mania, along with Crypto-mania.
The ISE call/put ratio, where I have been patiently waiting for the equity portion to rise over 3.0, did not see a reading over 3.0. The total however came awfully close to 2.0 and so I looked back to see if that mattered and quite frankly, it did.
There have been six such readings in the last two years. I have marked all of them on the chart of the S&P. Four of those six times, the drop in the S&P was immediate (even if just short-lived). And when there was not an immediate drop, we were working toward one (see September 2025). So yes, these call buyers are giddy.
