Market Outlook
It has been just about a month since the market hit new all time highs and in that time, the market has hit new all time highs more than 8 of those trading days. With how crazy the moves have been, with a big thanks to the Semi names, the EMAs are still showing us the tight trailing stops for now. We don't have to worry about calling the top, the break of the EMA will tell us when the climb is slowing.
The spot light is burning bright in the semi sector, as the moves in this sector continue to get compared to the bubble leading up to the major market top in 2000. The only difference is back then it was hundreds of names exploding daily for nearly a year, while this time around its only a very small select few over the last couple of weeks.
Now as the market continues to hit new all time highs, every few days, it feels like around the next corner is a major market crash. Yet very rarely do we see sell offs, then new ATHs and then another sell off. Looking back over the last 30 years, I could not find such an example. The reality is more then likely the new ATH train continues till we get to 800 in the S&P 500 this year. It might not be a straight climb, but we will see 800 before we see 600.
Even with the market up more then 15% in 6 weeks, it is respecting the EMA. As crazy as this turn around was from the market compared to what we expereinced for the first half of the year. It has had alot of us saying "I've never seen this before," when in reality, we have seen these types of moves before. But our memories of those times are hard to recall as we are often so focused on the whats around the corner, we forget to look at what happened at the prior bends that came before.
It feels like a life time ago, but almost exactly a year ago, the market was bottoming out from the Tarriff War as we were having our last "I've never seen this before" price action. Last year the market ran 25% in steep climb off lows, and than continued to hit new all time high after another until the market started to stall around 700, climbing another 17% during that second slower leg higher. From the lowest low of 2025, the market rallied more then 40% off lows in under a year.
If we go back further in time, in 2020, the first leg of the rally off lows was even more insane, as the market climbed 45% in the first move of the rally and then continued running up another 50% before topping out just under 500 later that year.
Now both of these examples, had much more aggressive sell offs that resulted in equally aggressive snap backs higher. Both of those prior "I've never seen this before" moves, started with a market stalling at all time highs, before selling off and then rallying to new highs. With only new ATHs on the horizon for the rest of those respective years.
This correction was not as scary percentage wise as the 2025 or 2020 bear markets, as we only had to endure a correction. But if history were to repeat itself, both of the prior examples did slow down the climb after a few months but continued onward and upward farther longer then anyone expected.
With the current steepness of the overall trend it feels like we will be at S&P 800 in a few weeks and it does seem more likely that we do hit 800 by the end of the year. When writing these newsletters its often hard to take bold stances at either ends of the move. As when we are at lows it feels like the bottom is miles lower, while after runs like this, it can feel like were invincible as stocks can only increase in price forever. But taking that into account and using 700 in the S&P as the line in the sand to raise cash, increasing daily/weekly contributions could be a wise move if you do not need the funds over the next 12 months.
I'm far more focused on getting cash to work in the major sectors and markets over individual names. Even as there are far more set ups in individual names currently but the spotlight is very limited as only a few select names are getting the love and people climb over one another to get into these select names. It was far easier for example to have just bought SMH over this last month then trying to ride or catch one individual semi name.
From Bennett
Founder Big Picture Trading
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