Nasdaq 100 Single-Day Bullish Signal Ranks in Top Ten of the Past Decade
Claire Weston
The Nasdaq 100 surged 3.3% Tuesday to within roughly 3% of its all-time high; a short-squeeze and call-buying frenzy pushed one bullish-sentiment gauge to a top-ten reading in a decade, but whether that signal turns into a trend hinges on earnings delivery.
What exactly is this "top-ten-in-a-decade" bullish signal?
Nations Indexes data show that one-standard-deviation out-of-the-money calls — options that pay off only on a big rally — on QQQ jumped 42% in a single day, the largest one-day move in five years and ninth-largest in ten.
This means → a huge wave of capital piled into "bet-on-a-rally" contracts on the same day, pushing bullish sentiment to an extreme.
Nations Indexes president Scott Nations put it bluntly: "Bears capitulated today. It is one of the ten most bullish trading days for the Nasdaq 100 in the past decade."
How frenzied was the call-option buying?
Nasdaq 100 options volume this month is 18% above the same period in July. Nasdaq's Kevin Davitt said this reflects "a notable pickup in investor engagement amid strong earnings and post-Fed stability."
The equivalent out-of-the-money call metric on the S&P 500 tracker SPY posted its seventh-largest single-day gain in nearly three years.
Even more unusual: call buying pushed the VIX — the "fear gauge" measuring expected market volatility — higher alongside stocks. That happens on only about 20% of trading days historically.
In plain terms = normally, rising stocks mean falling fear. Both rising together signals that traders are panic-buying upside insurance and bullish bets at the same time.
Sentiment is at an extreme — is chasing the rally still worth it?
Convex Asset Management CIO Noel Smith warned: "If you want to go long after today, maybe don't buy out-of-the-money calls anymore."
His logic: those options are now expensive. If the market rises but VIX falls, gains are slim. If the market drops and VIX falls too, losses are steep.
This means → the option market has already priced in the optimism. Buying now is boarding at the most expensive fare.
Can fundamentals support this wave of optimism?
FactSet data point to 47% S&P 500 earnings growth in Q2 — on track for the strongest single-quarter gain since the post-Covid rebound in 2021.
The S&P 500's forward 12-month P/E stands at 19.6×, below its five-year average — a direct counter to the bears' "bubble" thesis.
The equal-weight S&P 500 ETF is up 14% year-to-date, slightly ahead of the cap-weighted index at 13%. This reflects a rally that is broadening beyond a handful of mega-cap tech names.
What to watch next?
Sentiment gauges are at extremes; the marginal information value of the signal is fading in the near term.
The key variable is singular: can earnings-growth expectations keep being met? Delivery turns the signal into a trend; disappointment turns extreme optimism into a pullback trigger.
Content is for reference only, not financial advice.