Original Author: Zhao Ying
Original Source: Wall Street News
The latest assessment from Goldman Sachs' chief U.S. stock strategist shows that the current market euphoria has climbed to the 86th historical percentile, approaching but not yet reaching the extreme levels seen at the peaks of the 2000 dot-com bubble and the 2021 bull market.
Over the past two months, the S&P 500 index surged 15% before Friday's pullback, a gain ranking in the 99th percentile of historical data since 1980. In his latest report, Goldman Sachs' chief U.S. stock strategist Ben Snider pointed out that, although the four historical signals of a bull market peak — speculative frenzy, deteriorating growth, massive equity issuance, and Fed tightening — are not fully in place yet, each is closer to its trigger threshold than it was a few months ago.
For the market, this judgment means there is still room for the current bull market, but risks are accumulating. Snider explicitly stated "we're not there yet," while also warning that markets don't need investors to be extremely euphoric to decline, and historical patterns may not repeat themselves in this cycle.
The Strength of the Rally: The Strongest Volatility-Adjusted Rebound in 50 Years
The speed of this rebound has already left its mark in history. According to Goldman Sachs data, the S&P 500's roughly 15% gain over about two months, relative to realized volatility, yields a return/volatility ratio near 4, the highest level in over 50 years.
Artificial intelligence is the core theme driving this market phase. AI concept stocks, the momentum factor, and major indices are rising in sync, forming a high level of resonance.
Snider notes that unlike similar momentum-driven rallies in the past (such as late 1999 and late 2021), the main support for this round of gains comes from substantial recent upward revisions to earnings expectations, rather than a pure sentiment bubble. This provides a somewhat more solid fundamental backing for the current upswing.
Euphoria Indicator: 86th Percentile, Below Two Historical Peaks
To quantify current market sentiment, Snider constructed a comprehensive evaluation framework covering four categories and nine indicators. Historical data shows that at the peak of the 2000 dot-com bubble, the median ranking of these indicators reached the 100th historical percentile; at the 2021 bull market high, it was the 95th percentile. The current reading is the 86th percentile — above the historical average, but still significantly short of the previous two extreme peaks.
Specifically, Goldman Sachs' speculative trading indicator has risen in recent months but remains below levels at the end of 2025 and far below the peaks of 2000 and 2021. Among various speculative trading activities, the trading volume of high-valuation stocks has increased significantly recently, while the trading activity of unprofitable stocks is relatively mild. In addition, both equity call option volume and retail margin balances are trending upward, indicating investor sentiment is heating up.
Notably, the market breadth of this rally is extremely narrow, but it has not yet reached the extreme concentration seen during the dot-com bubble.
Four Risk Signals: Not Triggered Yet, but Distance is Shortening
Goldman Sachs' analytical framework attributes the end of historically high-valuation, high-concentration bull markets to four types of factors: speculative frenzy, deteriorating growth prospects, extremely bloated equity issuance, and Federal Reserve policy tightening. Snider points out that none of these four conditions fully matches the current environment, but each is closer to its warning line than at the beginning of the year.
IPO activity is reviving, with pressure beginning to show on the equity issuance side; rising input costs are compressing corporate profit margins, posing a potential threat to growth prospects; interest rate market pricing has started to reflect an increased probability of Fed rate hikes, although Goldman Sachs economists believe actual hikes are unlikely.
Snider also emphasizes that market declines do not require investors to be extremely euphoric as a precondition, and the euphoric characteristics seen at past bull market peaks may not reappear in identical form in this cycle. This means that even though current indicators have not yet reached historical extremes, investors should not view this as a sufficient guarantee of a safety margin.
Overall, Goldman Sachs' assessment offers a cautious but not pessimistic judgment: the euphoria level of this bull market is "getting closer and closer" to the historical peak range, but has not arrived yet. The key support for this judgment is that the current gains still have improving earnings expectations as fundamental backing, rather than being purely sentiment-driven. However, with the momentum factor remaining strong, market concentration high, and some risk signals quietly intensifying, Snider's report essentially serves as a reminder to investors: the window is still open, but it is slowly narrowing.
