Goldman Sachs strategists said in a Monday note that their positioning and sentiment indicator has seen a further increase, now sitting well above the 60th percentile, indicating a continued trend towards a bullish sentiment among investors.
The strategists highlighted that several indicators, including surveys and CFTC futures positioning, which had already shown a strong bullish sentiment in recent months, remain robust.
Moreover, there has been a noticeable uptick in equity and credit flows. The Goldman Sachs Risk Appetite Indicator (GSRAII) surpassing the 0.8 threshold has also contributed to a further rise in its comprehensive measure.
“About half of the indicators we track are above the 80th percentile vs. their own history (i.e. in bullish territory) and that share has been increasing recently, suggesting a broadening out of the bullish shift across assets and investor types,” strategists said.
On the other hand, market concentration remains notably high, they wrote, particularly in equities, with the 'Magnificent 7' and 'GRANOLAS' groups showing historically low options skew in the US and record lows in Europe.
Momentum strategies are off to one of their strongest yearly starts, with hedge funds increasing their gross exposure to record levels.
“All in all, while a resilient macroeconomic picture and a positive earnings season in the US have continued to support the bullish sentiment backdrop, investors are generally exposed to concentrated positions,” Goldman said in the note.