Goldman Sachs Indicator Shows Market Sentiment Running Hot, but Far from the 2000 Euphoria Level
Alina Collins
Goldman Sachs tracks U.S. equity speculation through nine indicators; the current average sits at the 66th percentile — above the historical mean but far below the 99th in 2000 and 92nd in 2021, suggesting the market is warm, not frothy.
The 66th percentile — is that actually hot?
Goldman strategist Ben Snider's team scores U.S. speculation across nine indicators spanning stock prices, trading activity, investor sentiment, and corporate sentiment.
The current composite reading is the 66th percentile — above the long-run midpoint. This means → the market is running warmer than normal, but it is nowhere close to euphoria.
For context: the same composite hit the 99th percentile during the 2000 dot-com bubble and the 92nd during the 2021 speculative wave. In plain terms = if 100 is mania, we are at 66 — not even a passing grade.
Which signals are already flashing red?
Goldman's momentum signal has risen to the 98th percentile; its market-breadth indicator sits at the 94th — both near historical extremes.
Yet Goldman notes the recent rally was driven mainly by a 16% upward revision in earnings-per-share forecasts, which actually exceeded the index's own 8% gain. This means → prices rose because expected profits rose, not because valuations inflated.
The put-call ratio — a gauge of bearish versus bullish options positioning — stands at the 88th percentile, leaning bullish but not extreme.
Record-high short interest — and that is actually reassuring?
Short positions on S&P 500 constituents now equal 3.2% of index market cap, the highest since the 2008 financial crisis.
This reflects a large pool of money betting on declines. In plain terms = if prices keep climbing, these shorts must buy to cover, which pushes prices higher still — the classic "short squeeze" dynamic.
Goldman argues this elevated short interest is precisely what distinguishes today's market from historical bubbles: near bubble peaks, almost nobody is short; right now, many are.
Are retail investors bullish or bearish?
Two sentiment surveys deliver opposite readings. The Yale U.S. Stock Market Confidence Index sits at the 97th percentile — extremely bullish.
Yet the latest weekly AAII poll shows 37% bearish respondents, slightly outnumbering the 36% who are bullish.
This means → different survey methods capture very different slices of sentiment; relying on a single indicator would be misleading.
What signal is corporate behavior sending?
2026 IPO volume is projected to match the long-run average — no sign of the frenzied listing wave typical of bubble periods.
Net equity issuance — the gap between buybacks and share sales — is expected to be roughly in line with the 2015–2019 average. In plain terms = companies are neither raising cash aggressively nor buying back stock at extreme rates; corporate behavior looks normal.
This reflects a corporate-level signal that is far calmer than investor sentiment, with no bubble alarm sounding.
What would it take to end the bull market?
Snider's framework: bull markets typically end when three forces converge — disappointing growth + a surge in equity issuance + Fed tightening.
None of these three conditions is fully present today. This means → by Goldman's own checklist, this is not yet the end of the bull run.
But Snider adds a warning: "each one is closer to a tipping point than it was a few months ago" — the destination has not arrived, but the direction of travel is clear.
Content is for reference only, not financial advice.