Jason Shapiro argues the market has shifted from fear to crowding, with AI-related names still leading despite frothy behavior. He sees the latest rally as evidence the bear trade lost, thinks oil/geopolitics have faded as immediate triggers, and says the best way to trade is to follow positioning and tape, not fundamentals alone.
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This is a David Lin interview with veteran trader Jason Shapiro, centered on current sentiment, AI leadership, geopolitical risk, and how he reads crowded trades. Shapiro says sentiment has swung sharply from extreme fear to broad bullishness, citing surging call volume, reduced put activity, and a fast V-shaped recovery in equities. He believes the market signaled that the bearish war/oil narrative was over when stocks closed higher on a day when oil was up more than 12%, and he now thinks the market has largely moved on from Iran as a near-term driver, though he continues to watch news flow and price reaction. A major portion of the discussion is on AI. Shapiro says AI is difficult to fade because it is being pushed by both corporate capex and national defense priorities. …
Near term, the market is still rewarding AI leadership and punishing attempts to fade the rally; the biggest tactical risk is that crowded longs stay crowded a bit longer. A bearish turn would need weaker relative action in AI names or a negative catalyst the market finally sells.
Over the next few weeks or months, the base case is continued rotation into the strongest AI-linked subsectors unless leadership starts to broaden and then stall. If those groups stop outperforming on good news, the setup shifts from trend-following to topping behavior.
Structurally, the transcript frames AI as a multi-year regime shift driven by capex, competition, and national-defense incentives. The long-term implication is a market where participation and relative strength matter more than traditional valuation stories, with labor and sector disruption remaining a persistent risk.
Market sentiment has swung sharply from extreme fear to bullishness over the last few weeks.
He cites the fear-and-greed shift, call/put positioning changes, and the V-shaped rebound.
The April 2 session signaled that the war/oil bearish narrative was losing force because stocks rose despite oil being up more than 12%.
He treats the positive stock close on a day of strong oil strength as a key tape confirmation.
AI remains the clearest leadership area, and it is difficult to fade because of both fundamentals and national-defense needs.
He argues money has to go into AI and that countries need AI for defense, supporting continued capex.
If the S&P goes down another 10% from here, would that be considered oversold in today's environment?
Jason admits he doesn't have a formal measure for oversold; he says it was oversold in retrospect. Markets that have gone down a lot are not where they're at now since they're back on highs, so bad war news would likely hit harder now.
Walk us through how you make a trading decision — how do you determine if something is extended in one direction?
Jason works with the theory that the market is a discounting mechanism but measures discounting by participation/positioning, not price. He looks for extreme positioning data that indicates bad news is already priced in, then waits for the market to confirm the reversal before entering a trade.
Is the AI space overcrowded or crowded in one direction or another?
Jason responds to the Allbirds AI pivot story as a frothy/bubbly sign similar to the late 90s dot-com pivot mania, but notes that doesn't mean it's over — the bubble lasted years. He then shares a spreadsheet breaking AI into 5 subsectors (power supply, cooling, compute, network, materials) showing every subsector averaging 22-39% returns, confirming AI is clearly where the bull market is.
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