Oh Come On!
Investor, Venture Capital Background
US large-cap stocks sit at all-time highs while facing an oil shock far greater than the tariffs behind a 20% crash. Middle East instability is lifting oil, damage not quickly undone. Big money has been leaving; unless that selling breaks the gamma grip on prices, it must come back, a ratchet that sets up bigger crashes. AI leaders are the least profitable software companies ever at the highest valuations, so the market can crash even if the data centers get built. x.com x.com x.com x.com
US large-cap equities are vulnerable because earnings have not caught up with total market capitalization. The market is farther from its 200-week moving average than at any point in 18 years, and cracks are starting to show; staying bullish ignores these risks. Rate hikes remain possible, oil is still high, and yields may climb again, so now is the time for caution. x.com x.com
The AI-led S&P 500 peak will likely end somewhere between 2000 and the Nifty Fifty: painful, but not a 34-year Japan-style wait. Breadth is ugly, with record index highs while most stocks bleed; @RestlessCentaur notes over 70% of S&P 500 stocks are down more than 10%. Today's leaders trade around 30x forward earnings, while the 2000 and Japan tops were two to three times pricier. x.com x.com x.com x.com x.com
Improving breadth and GPUs massively outrunning depreciation costs put US-equity risk/reward heavily in bulls' favour. Some 59% of S&P 500 stocks are above their 50-day average; the Nasdaq 100 is positive over five trading days, and small caps bounced off their 200-day average. Buy gradually, as the selloff may not be completely over. x.com
Broad deterioration beneath the surface keeps meaningful US large-cap exposure premature despite selective growth setups. Deepvue's breadth dashboard puts 56% of stocks in Stage 4 declines, while Friday saw 498 new lows against 170 new highs. A handful of medical/healthcare and software leaders can be tested in positions of 3%-5% of portfolio equity, but total exposure has a 15% hard ceiling, not a target. Adding depends on those leaders following through, better market conditions and results. … Show more
The S&P 500's elevated P/E masks concentration in just a few stocks, making index exposure less appealing than selective stock picking for risk and reward. Its P/E is well above the ten-year median; digging into individual constituents looks more sensible than buying all 500. x.com
Post-midterm market strength calls for patience with US large-cap equities. KHerriage's quoted post cites an average S&P 500 gain of 29.9% over the next 15 months in post-midterm periods since 1950, with gains in 19 of 19 years. x.com
US stocks face persistent uncertainty around the midterms through year-end as military-strike risk remains unresolved. Until a strike occurs or a genuine peace deal is signed, the market cannot price that risk confidently. x.com
US stocks remain vulnerable because leveraged long positions could amplify an unwind of the mania. The SPY-versus-long-Treasury trade has given back only a few weeks of its gains. x.com
Hyperscaler credit stress and weak financials-versus-staples leadership warn of downside risk in the S&P 500 consolidation. Spreads have broken July wides, though an upside breakout is probable if financials stabilize. So far, tech weakness has lowered yields as Fed hikes are priced out, letting defensives rally and the S&P chop. If the Fed signals Nasdaq weakness won't stop tightening without better data, the tech-yield link could break in an uncomfortable, 2018-like direction. x.com x.com … Show more
US stocks look increasingly vulnerable: high interest rates are making long positions harder, while more bearish setups are appearing as the market worsens. x.com