The S&P 500 Index ($SPX) may be hovering near all-time highs, but something underneath the surface is setting off alarm bells.

In a recent Market on Close segment, hosts John Rowland and “Twitter Tom” pointed to a dangerous market condition we haven’t seen in a while: full-blown euphoria.

It’s 2021 vibes all over again, as we’re seeing massive options flow into stocks like Opendoor (OPEN) — even outpacing names like Apple (AAPL) and Amazon (AMZN). That doesn’t happen in a rational market.

And the data backs it up.

Signs of a Speculative Surge

Meme stocks are leading the volume charts, as Opendoor, Kohl’s (KSS), and more companies with weak fundamentals are seeing massive inflows.

Options activity is exploding, especially short-dated calls, a hallmark of retail speculation.

Margin debt is spiking at a pace not seen since 1998 — often a late-cycle indicator.

The Barclays Euphoria meter just hit a yearly high. And Citi’s Levkovich Index is also sitting in “euphoria” territory.

Watch the clip for a look at the indicators John & Tom are tracking now:

Why That’s a Problem

Historically, this kind of extreme in investor sentiment tends to mark tops, not bottoms. We saw the same pattern:

• Late 2021: Meme stocks exploded before a sharp market correction.
• 2007: Real estate stocks soared as debt-fueled speculation peaked.
• 1999-2000: Dot-com mania drove euphoria until the bubble burst.

Today’s market isn’t just strong; it’s downright frothy. And with August and September historically two of the worst-performing months for the S&P, it might be time for traders to take a breath and reassess risk.

What You Can Do

Use Barchart tools to stay ahead of the curve:

• Check unusual options activity with Barchart’s Options Flow Screener
• Monitor stocks with rising short interest or volume spikes
• Track key indicators like gamma exposure and put/call ratios
• Explore Barchart Screeners to track speculative vs. value names