It's getting to the point where it's hard to find someone who has not visited the Treasury Direct website in the last year. A year ago, it was the i-Bonds, which I haven't seen anyone mention lately, but they were all the rage then. They were even the rage in the fall, the last time the yield on the 10-Year made it over 4%.
But now everyone just wants you to buy (generic) treasuries.
I freely admit I thought for sure we'd get hysteria with the rate zipping over 4% this week, but alas we had gloom but no hysteria. And stocks? Stocks said, "Four percent -- who cares?" The only place we see any sort of hysteria is in the Daily Sentiment Index (DSI) for bonds, where the number has fallen to 16.
As a reminder, the DSI is on a scale of zero to one hundred. I see readings under 15 as a yellow flag, a warning that things are getting way too stretched. A reading in single digits is an extreme and it's time to buy the underlying instrument. The inverse is true when we get to 85, it's a yellow flag. Over 90, it's a sell signal.
Sentiment toward stocks continues to deteriorate. The American Association of Individual Investors (AAII) saw the bulls notch up two points to 23.4%, but they remain low and are down from 37% just four short weeks ago.
The AAII bears, though, jumped six points to 44.8%. This is the highest of the year and they are up from 25% a few short weeks ago.
The National Association of Active Investment Managers (NAAIM) has dropped its exposure, as well. A few weeks ago they were at 85. Now they are at 47. So, as I have noted all week, the indicators are all moving in a direction toward oversold and too many bears.
Even the equity put/call ratio got in on the act. Wednesday it jumped to .97. This is the highest reading since mid-January. It is also the sort of action we saw in late 2022, so surely someone is going to (not so gently) tap me on the shoulder and say "0DTE" (Zero Days Til Expiration). It may be. But didn't we look back after the fact and see that 0DTE may have exacerbated the readings and made them off the charts extreme, but when we used the moving averages on this indicator, the indicator worked just fine, peaking at the lows and turning up at the highs (when not including the extreme readings).
Maybe it was all those put options that helped spark the rally on Thursday. Whatever it was, I would guess that until rates move back under 4%, I doubt folks will turn terribly bullish quickly.
