Bullish Market, With a Few Warning Signs
This week’s charts continue to show a decidedly bullish market.
📈 Breadth is improving.
The equal-weighted $S&P 500(.SPX)$ is starting to outperform the cap-weighted index, suggesting the rally is broadening beyond the mega-cap names. That’s generally a healthy sign for the market.
💰 Earnings are getting stronger.
Earnings revisions are surging, with a solid macro backdrop providing additional support. At the same time, higher prices are boosting investor confidence, sentiment and equity allocations.
⚠️ But the rally isn’t risk-free.
Seasonality is becoming less favorable, the Magnificent 7（ $NVIDIA(NVDA)$ $Apple(AAPL)$ $Alphabet(GOOG)$ $Microsoft(MSFT)$ $Amazon.com(AMZN)$ $Meta Platforms, Inc.(META)$ $Tesla Motors(TSLA)$ ） are starting to stall, credit breadth is weakening, and rising rates could eventually become a headwind.
🐯 Bottom line
Strong trend + improving breadth + solid macro + rising confidence = bullish setup.
But the shadows are getting harder to ignore: overconfidence, weaker seasonality, stalled mega caps and higher rates. The rally still has the upper hand, but these are the signals worth keeping on the radar.
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