Well, folks, if you’re feeling a little giddy looking at your portfolio, you’re not alone. The latest sentiment survey from the number crunchers at Bank of America suggests the market is practically floating on a cloud of optimism. In fact, bullishness is at its highest point since February, fueled by the biggest surge in profit optimism we’ve seen in five years and a record jump in appetite for risk.

It seems everyone has pushed their chips to the center of the table. Cash levels among global fund managers have dipped to just 3.9%. Now, in the BofA playbook, a cash level that low usually flashes a big, bright “sell” signal. But hold your horses. Before you liquidate your S&P 500 trackers, it’s worth looking at the fine print.

Even the bank that coined the signal isn’t calling for a mad dash for the exits. Their analysis suggests that while sentiment is getting a bit frothy, or “toppy,” the actual positioning in stocks isn’t at an extreme danger level. Bond market volatility is also snoozing. As their analysts wisely noted, greed is a much stickier emotion than fear. It’s harder to shake.

So, what does this mean for the average investor? It points not to a retreat, but to a rotation. Instead of cashing out entirely, the smart money is likely planning a “summer of hedging and rotation.” Think of it as musical chairs for your assets. Money will flow from the hot, crowded plays into sectors that have been overlooked. The party isn’t over; it’s just moving to a different room.

This all unfolds against a fascinating political backdrop that the market seems determined to ignore. We see record highs even as the administration’s leadership continues to rattle the tariff saber, with an August 1 deadline looming. Investors, for now, are calling that bluff. There’s also the ongoing drama at the central bank, with persistent pressure on the Fed Chair to lower rates. The market has already priced in at least one or two cuts by the end of the year, and a recent survey shows rampant speculation about who might be the next Fed chief, with names like Treasury Secretary Scott Bessent and former Governor Kevin Warsh being tossed around.

This confidence, or perhaps complacency, extends to the currency markets. The “short dollar” trade is now considered the most crowded in the world.3 Everyone, it seems, is betting against the greenback, pushing the euro to its strongest position since early 2005. It’s up nearly 13% this year. But here’s the wrinkle: the same survey shows that fewer managers think the dollar has much further to fall. When everyone is on one side of the boat, it doesn’t take much to tip it back the other way.

The takeaway? This isn’t a time to panic, but it’s certainly not a time to be complacent. The “toppy” feeling is real, but the next chapter is more likely to be about strategic repositioning than a full-blown correction. Keep an eye on where the money is flowing, not just whether it’s flowing out.