Extreme market complacency chart

I don't like to share proprietary content from my EWI subscription but since Dan Eric did the deed then EWI can go after him for copyright infringement since he is the one who made it public.  In any case, I think the chart is very interesting and that it defines the essential fundamental for ALL asset markets which is how many people are piled into one side of the trade.  At the end of the day, if everyone has been wildly optimistic for a long time, they must already be "all in", right?  I mean, if you were optimistic about something why would you refrain from buying it?

Well, the only real reason is that you have no more cash and no more access to margin debt.  We already saw during dot bomb that bubble fundamentals don't stop people from buying into  a bubble.  PE of 200? NO PROBLEM!  Because in the new world of bubble economics, you don't have to make a profit anymore, all you have to do is show growth in readership. 

Of course, all this works until it doesn't and then it all comes tumbling down.  In any case, bubbles can always bubble up a bit more and in some cases they can grow bigger than anyone ever really expected them to be able to but in the end they are all the same: they pop, and most people get screwed in the deal.

Having said all that, I modified EWI's chart slightly to add rails to the lower chart and also a blue potential extension that would create an all time low in the number of bears (the bear chart is inverted so a higher chart line = less bears).  That flat portion that they show might break out suddenly to the high side and then throw over the top rail as shown.  If you see that, well, time to really get bearish on these markets.