Which of the following represents a sign of market optimism?

In the context of market sentiment, increased public participation in stocks is a significant indicator of market optimism. When more investors and the general public become interested in the stock market, it typically suggests a belief in the potential for further gains and overall positive market conditions. This enthusiasm often leads to increased buying activity, which can drive prices higher and reflect a bullish outlook among participants.

The other choices do not indicate optimism in the same way. Selling by strong to weak hands during high prices suggests that more informed investors are cashing out while the market is still high, indicating potential uncertainty or a topping pattern. Cautious building of positions in utilities could reflect a defensive posture, as utility stocks are often considered safe havens during market volatility rather than a sign of optimism. Lastly, sharp declines in price without corresponding buying interest signify pessimism and a lack of confidence, as it demonstrates that sellers are dominating the market with insufficient support from buyers. Therefore, increased public participation in stocks stands out as a clear sign of market optimism.