Here are some mind-blowing figures for you.  In the 15 trading days since the start of October, the S&P 500 is on pace to close at a record high for the 10th time.  Further, if the S&P 500 finishes up on the day Friday, it will be the 19th time that the index has closed at a record high since the start of September; a period covering 35 trading days.  Keep in mind when reading these figures that all of these record highs have come at a time of year when stocks are typically at their weakest.

With all of these new highs piling up, 2017 is making a run for the record books in terms of the most record closing highs for a given year.  Already, 2017 is tied for the fifth most closing highs on record (dating back to 1929), and provided we don’t see any major pullbacks, with two months left in the year, there’s the potential for more.  For example, if the rest of the year goes along at the same pace as the first ten months (a big if given that new highs tend to come in bunches), 2017 is on pace to see 61 record closing highs for the S&P 500.  That would rank as the third most for any given year behind only 1995 (77) and 1964 (65).  Not only were both of those years good for bulls, but the years that followed them were also positive with a gain of 9.1% in 1965 and 20.3% in 1996.  With 47 trading days left in 2017, surpassing the record of 77 back in 1995 would be an extremely tall task, but a move into the third spot is certainly possible.

The Yale School of Management runs a monthly sentiment survey on both individual and institutional investors.  Four questions are asked of investors, and below we provide charts showing the historical results through September 2017.  The first chart shows the results for Yale’s “One-Year Confidence” reading which asked respondents how confident they are that the stock market will be higher a year from now.

As you can see, this reading amazingly spiked to nearly 100% in mid-2017 for institutional investors, and it got above 90% for individual investors.  Over the last few months, however, bullish sentiment towards the stock market has dropped dramatically, and at this point investors surveyed are less optimistic towards stocks than they were just prior to last November’s Presidential Election.

The second question covers investor confidence in the valuation of the stock market.  High readings mean investors like the valuation of the market, and vice versa for low readings.  As shown, both institutional and individual investors think valuations are as unattractive as they’ve been in the history of the survey dating back to 2001.

The “Buy on Dips” question asks investors how eager they are to buy stocks after the market experiences a big decline.  This reading is in the middle of its historical range right now for both individual and institutional investors, but it has picked up a bit in recent months.

The last question asks investors how confident they are that there WILL NOT be a stock market crash in the next six months.  A high reading means investors aren’t worried about a crash, which would be indicative of excess complacency in the market.  While this sentiment measure has been rising slowly over the last year, it’s not elevated compared to historical readings by any means.

Earlier this week we published a more in-depth analysis of Yale’s sentiment survey including an update to our “Irrational Exuberance” indicator.  Start a free trial to one of our membership levels to see the report.

Throughout the bust and the ensuing recovery in residential housing, the performance of homebuilder stocks has closely tracked the trend in Housing Starts and Building Permits.  Below, we highlight this relationship by comparing the iShares Home Construction ETF (ITB) to the three-month moving average of Housing Starts and Building Permits.  The relationship between the two is so strong that the correlation coefficient between monthly Housing Starts and the closing prices of ITB is 0.89, while the correlation of ITB with Building Permits is even stronger at 0.91.  For the sake of reference, a perfect correlation would be a reading of +1.

While the historical relationship between the two has been strong, we would note that in the last year both Starts and Permits have been drifting lower even as homebuilder stocks have surged.  In 2015, we saw a divergence in the opposite direction where Starts and Permits outpaced the gains in homebuilder stocks.  In that period, the homebuilder stocks eventually caught up, so perhaps we are just seeing the opposite pattern now.  The two haven’t always tracked each other step for step, but the fact that the builders have rallied so much this year even as Starts and Permits have declined should be monitored for any signs of that weakness finding its way into the homebuilder stocks.