The AI Melt Up Finally Started Cracking

The AI-driven market rally has hit a critical exhaustion point characterized by extreme retail call buying and record-high risk appetite. Indicators like the Nasdaq's distance from its moving averages suggest a violent reversal is underway.

Key Takeaways

• 1.The Nasdaq-100 (NDX) reached historically stretched levels, trading more than 15% above its 100-day moving average before starting a violent reversal.
• 2.Investor sentiment shifted to extreme greed, with Goldman's Risk Appetite Indicator reaching a 5-year high and its fastest recovery from negative levels since 2000.
• 3.Retail participation in mega-cap tech is at its highest level since the COVID 'meme stock' era, with over 52% of opening activity in calls.

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
• The melt-up finally started running into positioning limits

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