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Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here. |
The chart displays the NAAIM Exposure Index to US Equity Markets, which measures the exposure of active investment managers to US equity markets. The current value of 103.88 as of April 1, 2024, suggests active managers are heavily allocated to stocks, which could be interpreted as an overly bullish stance, leaving little room for further upside.
Historically, extreme readings on sentiment indicators like the NAAIM index have marked potential turning points in market trends, as excessive optimism or pessimism can signal a crowded trade that may be due for a reversal.
Regarding the NAAIM dynamic 60/40 portfolio allocation, the 13.85% overweight in equities and -20.88% underweight in bonds further confirm the bullish tilt among these active managers. They have significantly increased equity exposure above the traditional 60% stocks/40% bonds allocation.
While this positioning reflects the current consensus view, contrarians view such an extended bullish stance as a warning signal.
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
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