Tracking market sentiment, positioning, and breadth is a helpful way to spot potential turning points.
In the above chart we can see that we have some readings of complacency and bullishness that are worth noting. It may or may not be a turning point, but nevertheless this data set has changed significantly in the last two weeks.
Volatility is mispriced at a discount, as realized volatility is closer to 24, and the VIX (implied volatility) is 19.63 as of Friday. This implies complacency.
HY/IG spreads continue to narrow as some level of recent tightness within financial conditions is unwound.
The NYSE McClellan Oscillator (inverted) shows that we had some extreme breadth readings that may have led to a bit of buyer exhaustion of late.
CBOE equity put/call ratio last week reached a low of 0.41, and not long after that euphoric extreme we did see some selling pressure increase. The current equity put/call ratio is 0.59 which is more neutral based on recent trends.
NAAIM Exposure Index (inverted) is back to levels of bullishness we haven't seen since the first week of 2022.
Rydex bear/bull fund ratio is back to bullish excitement, after flirting with extreme bearishness.
In summary, market participants are more comfortable taking risk here, whether it's in actively managed funds, the options market, or in credit markets. Volatility remains affordable, making buying hedges potentially attractive.