Chart: The Euphoriameter and the S&P 500

Here’s the June flash reading of the Euphoriameter – which is a composite measure of investor sentiment on the S&P500. The key takeaway is that after an almost 0.5 standard deviation reset during the correction, it has started to move up again. Indeed, you can see on the chart that the “reset” took the euphoriameter from the highest level since the dot com boom, back to levels seen around the start of 2017 – so a complete unwinding of the tax-cut hype. As noted elsewhere, we are certainly moving through the later stages of the business cycle, but when I see a material reset like this which is followed by a rebound, I can’t help but wonder if this is simply a “healthy reset” which could pave the way to higher stock prices.