The Takeaway: Today’s note reads differently. This is a walkthrough of current market sentiment.
The Market Backdrop - The S&P 500 remains in a primary uptrend and continues to trade near highs. Price structure is intact, but the tape has shifted away from smooth momentum. Risk has returned, and participation now requires more selectivity.
Volatility Check - The VIX is at 18.6, above complacency and below fear. Volatility is present, but it is not driving disorderly behavior. Markets are aware of risk without reacting emotionally.
Options Positioning - The 5-day equity put/call ratio is at 64, placing it in fear territory, while the 10-day ratio at 85 remains neutral. Short-term traders are buying protection, but that behavior has not escalated into stress. This is hedging activity, not forced selling.
Sentiment Surveys - Investors Intelligence is at 35.8, back in optimism territory. AAII stands at 21.3 and remains neutral. Sentiment has improved, but it has not shifted into excess.
Manager Positioning - The NAAIM Exposure Index is at 96.0, showing that active managers remain heavily invested. Professional capital has stayed engaged despite higher volatility and rising hedging demand. Exposure has been maintained rather than reduced.
The Read - This is not a complacent market, and it is not a fearful one. Caution is showing up through short-term hedging, while longer-term positioning remains committed. That setup often leads to digestion and rotation instead of trend failure.
What Would Change the View - A sustained rise in the VIX toward the upper-20s alongside higher put/call ratios would point to fear taking control. On the other side, falling volatility and collapsing protection while exposure stays elevated would raise complacency risk. Neither condition is present today.
Bottom Line - The crowd is alert, invested, and managing risk. Volatility has returned, but it has not broken behavior. As long as positioning stays engaged and stress remains contained, the primary trend remains intact, even if progress slows.
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