As the S&P 500 hits a new high for the 24th time this year, the FOMO sentiment seems to be "absent"! Is the best time for the current stock market rally coming to an end?

According to the Zhitong Finance and Economics APP, currently, the rise in the U.S. stock market seems to have a kind of frenzy nature, with many comparing it to the frenzy of the stock market in the early stages of the epidemic where stocks only rose and did not fall. All major stock indices are at or near historical highs, with 57 stocks in the NASDAQ Composite Index having risen by over 150% this year. At the same time, meme concept stocks have once again suddenly surged, seemingly rising randomly.

However, there is a key missing factor: investors have not been buying derivative contracts. If the stock market continues to soar, these contracts could give them the opportunity to make a big profit. It is well known that the lack of demand for call options indicates that beneath the surface, people on Wall Street and in day trading circles have a feeling that unlike the prosperity period of 2020, the best time for this rebound is about to end.

Amy Wu Silverman, Head of Capital Markets Derivatives Strategy at Royal Bank of Canada, said, "In the past, when we entered the FOMO cycle, you would see demand for call options." In Wall Street terms, call options are a bet on the "right tail" of the market chart. "We don't see a chase for the right tail."

The loss of optimistic sentiment highlights a change in the macroeconomic landscape, indicating that traders are preparing not for a strong rebound, but for a gradual rise. Earlier this year, the stock market was supported by two main pillars: strong corporate earnings and hopes for multiple rate cuts in 2024.

However, the market now expects that the earliest rate cut will only happen in September, with some Wall Street economists even warning that the Fed may maintain high rates for the remainder of the year. This is a far cry from the near-zero rates and quantitative easing policies of four years ago.

The latest earnings season also failed to stimulate the kind of speculative behavior seen in March. With strong performances from companies like NVIDIA (NVDA.US) and Microsoft (MSFT.US), companies reported a nearly 8% year-on-year increase in earnings per share, slightly lower than the previous quarter.

Overall, the results are not bad, just "not good enough to make you want to keep buying call options all the time," said Scott Nations, President of Nations Indexes. The company's CallDex Index (measuring the cost of over-the-counter call options on the S&P 500 Index for one month) last week approached its lowest level in nearly a year. This data indicates that investors are almost unwilling to pay for short-term contracts, even though short-term contracts would bring returns once the stock market rises.

However, while options traders are not prepared for further gains, investors seem unwilling to give up hope. A survey by the Investment Company Institute showed that stock exposure jumped from over 60% at the end of April to over 94%. It is worth noting that the increased allocation is still 10% lower than the peak in MarchThe options market also does not show concerns about potential selling. In the past week, the Cboe Volatility Index hit its lowest level since the outbreak of the epidemic, as demand for put options to guard against a sharp market decline remains subdued.

The growth of options selling funds has also created favorable conditions for potential buyers of any large-scale selling to further profit.

Scott Rubner, Managing Director and Strategy Expert at Goldman Sachs Global Markets Division, wrote in a report, "Our index traders go long $7.8 billion of Gamma for every 1% move. This feature will help reduce the potential for larger losses."

Brandon Yarkin, Chief Operating Officer of Universa Investments LP, stated that reduced risk-taking does not necessarily mean a stock market pullback. He mentioned that market sentiment can act as a contrarian indicator: excessive bullish positions like those in March may signal a pullback like that in April. Some restraint from traders may be a positive signal for the stock market.

Yarkin said, "We haven't really reached the extreme bullish levels that usually signal the end of an uptrend. We will see this as further evidence that the market has more support."