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

SPY's current pullback looks brief because whale accumulation remains above the level associated with mid-term trend continuation. The reading is 87.74%; it fell below 80% before both recent major crashes. Barring a black-swan event or major unexpected fundamental shift, this decline looks closer to earlier minor corrections. The stock market still has significant upside, and fear-driven discounts remain opportunities. x.com  x.com 

The S&P 500 is vulnerable to a midterm-election drawdown, since history shows nasty 7-16% declines almost always come around midterms. Elevated 10-year yields and a strong dollar add risk, even though nothing looks bearish yet and rising yields have not dented the Nasdaq or mega-caps, and cheap volatility makes hedging attractive. SPY could reach $800 and still fall back to $750 within two months. x.com 

US large-cap equities should keep rising because tailwinds far outweigh headwinds, making any dip a buy. Endless money printing inevitably flows into equities, the AI revolution is arriving with robotics close behind, and S&P companies are reporting surging earnings beats. The AI and robotics revolution isn't remotely priced in, as labor costs trend toward zero while corporate profits keep rising. Elliott wave calls for a historic top miss this broader picture. x.com 

US stocks can keep rising even as yields climb, because corporate earnings growth far outpaces inflation. In 1994, bond yields rose 263 basis points while earnings grew 18%; the S&P 500 went flat, then 1995 brought one of the greatest bull runs ever. Today rates are up 100 basis points against 32% earnings growth, and real GDP growth could reach 7%. Earnings and inflation drive stocks and bonds, not the other way around. x.com 

The 10-year yield above 5% limits how far the US equity rally can stretch, even as stocks shrugged off the Fed hold. Two policymakers wanted a hike, the 10-year rose to about 5.04%, and bonds sold while all four major indices closed higher. Rates need to cool for the rally to extend. x.com 

A sharp VIX spike followed by a reversal has historically favored SPY over the following weeks when VIX was at or below 25. After a 21% spike Friday and a 7% fall today, SPY's one-week return averaged 1.10% in 14 comparable events over the past decade, with gains in 12; the next-day average was just 0.07%. Could this have been capitulation? x.com  x.com 

The S&P 500 rally likely has a few more days worth staying exposed to, because SPY's cumulative advance/decline line is still below its all-time high. The A/D line turned up at the end of March and its trend remains positive. The Fear & Greed Index keeps climbing, though, so it may be time to start dialing back exposure. 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 

Broader participation, earnings growth and lower multiples support US equities into year-end, with seasonality also favorable. The equal-weight S&P rose 1.95% this week while the cap-weighted index slipped 0.05%; EPS is up 38% so far and multiples are down 17% year to date. The 10-year yield fell 41 basis points. x.com