U.S. stock-market euphoria may be nearing a dangerous level, says RBC strategist

The stock market bulls and bears have been out in force lately.

Take the head of the world’s biggest asset manager, BlackRock’s Larry Fink, who said Tuesday, as the S&P 500 inched closer to a record, that he sees a risk of those, afraid of missing out, piling into the market in a so-called “melt-up.” What he’s not too worried about is a big selloff, at least in the near term.

With that in mind, a number of fund managers are taking precautions against a potential selloff, even though history doesn’t exactly dictate that this 10-year-old bull market has an expiration date.

Onto our call of the day, from RBC Capital Markets’ head of U.S. equity strategy, Lori Calvasina who told MarketWatch in a recent interview that she’s getting worried there may be a little too much euphoria around the S&P 500 right now.

Calvasina has been tracking weekly U.S. equity futures reports provided by the U.S. Commodity Futures Trading Commission (CFTC). Some on Wall Street use those data as a measure of sentiment of how hedge funds and institutional investors are positioning in the U.S. equity markets.

“The data, when you bake it all together, is starting to show [the] positioning in U.S. equity futures is parabolic, shooting straight up. It isn’t back to levels in January or September of last year, but it is starting to move up very rapidly,” said Calvasina, sharing her chart that reflects weekly data up to April 9.

Here’s her chart that indicates spikes in long equity futures bets in January and February in 2018.

Bulls on parade: U.S. long equity futures spike

She explains that the futures contracts peaked in those two months last year, which ultimately coincided with a top for the S&P and subsequent selloff, so she is keeping

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