Has Stock Market Exuberance Become Irrational?

The stock market has rallied strongly in Q2 2026 with the S&P 500 up 12.6% and Nasdaq-100 up over 20%. While sentiment indicators like the AAII survey remain near historical averages and positioning has moderated from extreme levels, record margin debt ($1.42 trillion) and overbought conditions in semiconductors suggest elevated optimism. The article concludes the market shows signs of a mature bull market due for a pause rather than irrational exuberance, with semiconductors particularly stretched at 64% premium to their 40-week moving average.