Head of Research, Founder: @topdowncharts
Global Macro & Asset Allocation Research
(tweets = not advice)
NOTE: I will never DM you -- beware of scammers.
Learnings and conclusions from this week’s charts:
1. The equal-weighted S&P500 has broken out to new highs.
2. Space stocks are soaring following the SpaceX IPO filing.
3. SpaceX (SPCX) could end up with an index weight of 3%*.
4. The mega-IPO wave is a sign of the times (late-cycle signal).
5. The swearing-in of a new Fed Chair might be a bearish omen.
Overall, the bull market got a bit more bully this week with the breakout of the equal-weighted index. But the arrival of a new Fed Chair and IPO boom points to a more volatile horizon…
(click through to charts 👇)
$SPY $SPX $ES_F $MACRO
Chart of the Week - The Speculation Generation
Today’s chart is one for tomorrow’s history books.
It shows US households running the highest allocation to equities on record (and [as a result] the stockmarket trading at record high valuations).
This is the type of shift you see only once in a generation, and it means a fundamental change in market structure with significant implications for the economy, politics, and the forward looking risk vs return outlook.
But to be fair, with the S&P500 gaining more than 10x off the March 2009 lows — it’s an entirely understandable development!
And even though it got this way for very logical reasons (strong earnings growth, waves of tech disruption, low interest rates, passive flows), it’s important to acknowledge that this is not normal and we live in highly unusual times.
Investor confidence is near record highs, earnings optimism is at euphoric levels, defensives and diversifiers are in the dustbin, and social media chatter is saturated with an almost desperate sense of greed (with investors growing accustomed to 2x, 3x, 10x returns, and the bull market minting many geniuses).
This is the speculation generation.
p.s. this is neither good nor bad, it’s just a thing… and that’s the thing: as market analysts we ought to not got get bogged down in good or bad, bullish or bearish, optimism or pessimism —but rather what is the lay of the land? what does the data tell us? and what are the most pragmatic next steps we should take (or prepare to make…)
Bottom line: a generational shift in investor behavior has been observed.
Weekly S&P500 ChartStorm https://t.co/bVlqAHterR
This week: monthly chart, the age of speculation, risk flags, opportunity signs, emerging markets adjusted for AI stocks, AI earnings euphoria...