Wall Street Is Betting Against Tech
In summary, the bearish sentiment among futures traders regarding tech stocks could indicate a potential for further gains in the market.
Headlines
- Futures Traders Are Bearish, Indicating Potential Growth. When futures traders are overwhelmingly negative, history shows it often points to a rise in tech stocks.
- Tech Stocks Are Not Truly in a Mania Stage. The extreme valuations like SpaceX's don't represent the entire tech market's situation.
- History Shows Buying Opportunities During Bearish Sentiment. Past similar bearish stances have led to significant gains in the Nasdaq 100.
Things
- People: Brett Eversole, Nassim Taleb, Luke Lango
- Places: Wall Street, Nasdaq
- Numbers: $1.8 trillion, 50%, 18.9%
- Things & Concepts: Tech stocks, Commitment of Traders report, AI Megadeal Event, bear market, speculative enthusiasm
The Contrarian Signal Pointing to Further Upside
You can get a read on sentiment by asking investors how they feel. But that'll only get you so far. People lie. They often hide their true feelings… Or they might believe one thing but do another.
As author and hedge-fund manager Nassim Taleb famously said, "Don't tell me what you think, tell me what you have in your portfolio."
The best way to gauge sentiment is to track what people are actually doing with their money. That's why we often look at the futures market and the Commitment of Traders ("COT") report.
This weekly report shows how futures traders are positioned. It's also a useful contrarian indicator… because when these folks all agree, they're usually wrong.
Right now, futures traders are betting against the tech-heavy Nasdaq 100 Index at nearly the highest rate in history. Take a look…
Futures traders were wildly bullish on the Nasdaq 100 in late 2025. But sentiment has collapsed since then. Today, they're more bearish than at any point besides the 2020 market panic.
That's a powerful contrarian signal. And history shows that tech stocks could keep moving higher from here.
To see why, I looked at each new 52-week low in the Nasdaq 100's COT report. We've seen 11 other instances since the data begins in mid-2010. And each sentiment low was a powerful buying opportunity. Take a look…
The post-financial-crisis boom in technology has been one for the record books. The Nasdaq 100 is up 18.9% a year since mid-2010. But investors who bought when futures traders were the most bearish did even better…
Those setups led to gains of 8.2% in three months, 12% in six months, and 23.9% in a year. Plus, the Nasdaq 100 was higher a year later 100% of the time.
Sure, it's easy to find crazy behavior in today's market. But a few wild anecdotes don't explain the big picture.
As surprising as it might be, futures traders are darn bearish on tech right now. From a contrarian perspective, that's exactly the kind of skepticism that can fuel the next leg higher.
This market won't peak until everyone is "all in." We're not there yet… which means this bull market can still move much higher.
