The S&P 500 Index hit an all-time high, causing bullish sentiment in market newsletters to jump to 51% from 39%. This 12% increase was the largest one-week jump since 1980. However, historically, the index has performed worse when the bullish sentiment is in the 49% to 55% range.

After a spike in bullish newsletters by 10% or more, there is outperformance in the stock market, especially in the shorter term. For example, in the two months following a spike, the SPX averaged a return of 2.6% compared to the typical return of 1.48% for that timeframe. However, there is underperformance after one year.

The survey of investment newsletters by Investors Intelligence (II) has been a contrarian indicator, with higher returns when the percentage of bullish newsletters is lower. While the recent spike in bullish sentiment falls into a range of historically lower returns, after a large spike, the SPX tends to outperform typical returns. This suggests that new buying may be driven by the increase in bullish arguments presented in newsletters.

Read more at Yahoo Finance: Contrarian Indicator Flashing Amid Bullish Sentiment