AI Melt-Up Finally Started Cracking

The AI-driven market melt-up is facing a violent reversal after reaching historic valuation and positioning extremes. Massive retail call buying and record risk appetite have created a fragile environment characterized by expanding volatility.

Key Takeaways

• 1.The AI-driven market rally has reached historically overextended levels, with the Nasdaq trading more than 15% above its 100-day moving average.
• 2.Retail investor sentiment has reached extremes comparable to the 2021 meme-stock era, with over 52% of activity in mega-cap tech being call buying.
• 3.Risk appetite has seen one of the fastest and sharpest recoveries since 2000, now sitting at its highest level in 5 years.

Table of Contents

• Just In Time
• Reversal perfection
• Came in stretched
• SOX puke
• Everybody sucked in
• Hungry for risk
• Upside fear is the new downside fear
• Upside panic superlatives
• Retail call buying near 2021 extremes
• SPX vs MOVE
• This is what upside panic looks like

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