Extremes: Nobody Cares About Downside Anymore

The market is experiencing an extreme AI-driven melt-up fueled by $115B in leveraged ETF buying, mirroring the dot-com bubble mania. Positioning has become unstable as investors abandon downside protection in favor of chasing upside volatility.

Key Takeaways

• 1.The current AI-driven market rally is exhibiting extremes last seen during the late-stage dot-com bubble and the period before the 1987 crash.
• 2.Leveraged ETF rebalancing is a massive mechanical driver of current upside, with $115B of buying in the last month alone.
• 3.Investor sentiment is completely focused on 'upside fear' (FOMO), leading to a significant lack of downside protection.

Table of Contents

• Extremes
• 1999
• SOX vs KOSPI
• Leveraged ETFs
• 3x bull
• Upside panic superlatives
• Upside fear is the new downside fear
• Dare some downside?

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