Numerous sentiment indicators “show a decent amount of froth in the market,” but that doesn’t necessarily signal a downturn, according to Charles Schwab Chief Investment Strategist Liz Ann Sonders.
"It's both on the attitudinal side of things, so survey-based data, as well as on the behavioral side,” she said Tuesday on CNBC’s “Closing Bell.”
“You can see it in fund flows, particularly huge inflows into large-cap equity ETFs," she said. "You're certainly seeing a lot of speculation and froth in pockets of the market, whether it's in the art world or crypto world or leveraged single-stock ETFs,” she said.
While Sonders worries about that as a backdrop, sentiment isn’t a very good market-timing tool even when it reaches extremes, she said.
