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.

We covered the NAAIM index recently on December 15. We were surprised that after a 700-point S&P 500 rally, the active manager community had yet to be fully allocated to equities. Now they are.

97% Equity Exposure Suggests Slowdown is Coming - 18

The NAAIM Exposure Index, which gauges active investment managers' equity exposure, stands at an elevated 97.32% as we head through the holiday season, a jump from last week's 77.9%. Historically, when the index reaches such high levels, it can serve as a contrarian signal, indicating that there might be a pullback or at least a slowdown in equity markets. This is because extreme bullish sentiment, as reflected by such a high index value, often precedes market corrections as it suggests overbought conditions or limited cash left to drive markets higher, at least from the active community.

Learn more about the Market Situation Report written by Tier 1 Alpha.


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