The Melt-Up Psychology

The market is currently in a late-stage melt-up characterized by record call option volume, high short exposure, and the abandonment of downside protection. However, BofA's Bull & Bear indicator reaching 8 has triggered a significant contrarian sell signal.

Key Takeaways

• 1.The market is exhibiting a classic late-stage melt-up psychology, mirroring the 1997 pattern where FOMO overrides fear of downside.
• 2.BofA's Bull & Bear Indicator has hit 8, triggering a contrarian sell signal while consensus remains max bullish on positioning and profits.
• 3.Investors are aggressively abandoning downside protection (puts) and call option mania is surging, particularly in Tech, Financials, and China.

Table of Contents

• The Melt-Up Psychology
• 1997
• Must have tech
• Sorry bears
• NAAIM
• Not euphoric enough
• The big short
• Call options mania
• Leading the options upside panic
• Protection aversion
• Puts for suckers
• But before you get too bullish...
• The king of sell signals

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