Wall Street options market flashes extreme bullish signal, "fear of missing out" becomes the main engine driving the U.S. stock market breakout

Odaily News: The U.S. stock options market has flashed its strongest bullish signal in four years, with institutional investors "preferring to take a hit rather than miss the rally." The easing of geopolitical tensions in the Middle East, softer international oil prices, and strong corporate earnings are jointly pushing U.S. stocks toward record highs. As multiple options market indicators trigger the most intense bullish signals in recent years, "fear of missing out" (FOMO) is emerging as an independent driver of this rally.

In the four trading days leading up to August 4, the S&P 500 index surged a cumulative 5.8%. This sharp valuation recovery came directly after a brutal sell-off in AI-related sectors in late July.

In the roughly three months before this rapid rally, the benchmark index had been trapped in a narrow 5.7% range—well below the historical average of 12.5% for three-month rolling periods since 2006.

Mark Hackett, chief market strategist at Nationwide, pointed out that years of buy-the-dip strategies are once again paying off handsomely. He said: "Several factors are at play, and FOMO is one of them."

Hackett further elaborated on the dilemma facing bears. He emphasized: "Most of the core tenets of the bearish thesis have collapsed, and shorting on either an absolute or relative basis is a risk many are unwilling to take."