Not long ago fin-twit was bemoaning the 'narrow leadership' driving markets inexorably higher. The general warning issued was that FAANG and "covid" stocks were the only names carrying the market as an alarming lack of participation came from small caps, energy, and financials. Now we have IWM, energy, and financials helping drive the indices to fresh all-time-highs as FAANG lies mainly dormant in deep consolidation patterns. 

The current warning sign is that bullish sentiment is overheated, and there is no denying that fact.  CNN's popular "Fear & Greed Index" is reading 89: Extreme Greed. If you are unfamiliar with this admittedly commercialized index it is based on very sound market measurements of breadth, volatility, demand, and momentum. Read more here.

I follow price-action, which is certainly bullish. My way of acknowledging the overheated sentiment is to cap my total open risk. Usually I have a maximum of 600 bps risk at any given time; more often that...