AAII allocation to stocks rose to the highest since December 2017

1. DXY. The US Dollar Index has broken out to the highest levels since Apr'25.

2. SPX vs. credit spreads. "Credit spreads just hit 100-day highs and crossed above their 50-day average ... When spreads widen like this, stocks tend to suffer."

3. AAII Asset Allocation. Despite this cohort's persistently bearish sentiment, AAII allocation to stocks rose in September to the highest since December 2017. Allocation to cash also dropped to the lowest since December 2017.

4. Buybacks. "Corporates are still largely in their Q3 earnings blackout, but the buyback window begins to reopen on October 15. From there, the corporate bid should build through earnings season and accelerate into November, historically the strongest month of the year for corporate buyback executions."

5. Token volumes vs. token spend. "AI Spend FALLS in the latest Ramp AI Index. Price cuts at the frontier, in addition to cheaper and more efficient models at standard and lite levels, are pushing down the cost of using AI. Open source models remain <5% of business spend. This decline in spend is driven almost exclusively by competition between OpenAI + Anthropic."

ICYMI