Market optimism may be reaching a crescendo, with hopes that stocks will keep rising equaling a level not seen in 31 years.
Specifically, the difference between bullishness and bearishness among professional investors is at its highest since April 1986, according to the Investors Intelligence survey that gauges the outlook of newsletter authors.
Those expecting the market to move higher numbered 64.4 percent, up from 61.9 percent a week ago, according to an II release Wednesday. That's equal to the reading of early November 2017. On the other side, those looking for the market to fall tumbled to 13.5 percent, which is the lowest level since August 2014.
The spread between the two numbers is 50.9 percent, up from 46.7 percent a week ago. That multidecade high normally would represent a contrarian signal that the market is getting into dangerously overbought levels.
However, the time period when the spread was last this high inspires a particular reason for caution. Sentiment surveys can be contrarian indicators when they reach elevated levels, meaning that rampant bullishness is often a sell signal.
Bulls and bears showed a wide disparity in 1986, with optimism occasionally wavering then rebounding. That movement, of course, would yield brutal results a year and a half later when Black Monday hit the stock market and the Dow fell nearly 22 percent in one wicked October day.