The U.S. equity options market is flashing its strongest bullish signal in four years, with institutional investors saying they would rather take a beating than miss the next rally. Easing geopolitical tensions in the Middle East, softer crude prices, and strong corporate earnings are pushing American stocks toward record highs, while multiple options indicators have triggered the most intense bullish readings in recent years. The S&P 500 surged 5.8% in the four trading sessions before August 4, coming directly after a brutal late-July selloff in AI-related shares. Prior to that run, the benchmark had spent roughly three months locked in a narrow 5.7% range, far below the 12.5% historical average for three-month rolling periods since 2006. Mark Hackett, chief market strategist at Nationwide, says the buy-the-dip playbook is paying off again and that most core tenets of the bearish thesis have collapsed, making shorting — on both an absolute and relative basis — a risk few are willing to take.
The U.S. equity options market has flashed its strongest bullish signal in four years. Institutions are making their stance clear: they would rather take a beating than sit out the rally.
Several forces are lining up. Middle East geopolitical tensions have eased, crude prices have weakened, and corporate earnings remain strong. Together, they are pushing American stocks toward record highs. Multiple options-market indicators have now triggered the most intense bullish readings in recent years, with fear of missing out — FOMO — emerging as an independent driver of the advance.
The tape shows it clearly. In the four trading sessions before August 4, the S&P 500 gained a cumulative 5.8%. That sharp rebound in valuations came right on the heels of a brutal late-July selloff in AI-related stocks. Before the surge, the benchmark index had spent roughly three months stuck in a narrow 5.7% range — an amplitude well below the 12.5% historical average for three-month rolling periods since 2006.
Mark Hackett, chief market strategist at Nationwide, says the years-old playbook of buying the dip is paying off handsomely once again. 「There are several factors at work, FOMO being one of them,」Hackett said. He also laid out the dilemma facing bears. 「Most of the core tenets of the bearish thesis have collapsed. Shorting, on both an absolute and relative basis, is a risk many are unwilling to take,」he stressed.
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