Weekly Update: The Insane Strength of This Bull Market
Good evening, and welcome to this week’s edition of Stealth Trades!
This is one of the strongest bull markets I have ever seen. Nothing has been able to slow it down. Rising bond yields, lost hope of rate cuts, surging energy prices, even a war in the Middle East. Stocks continue to march higher.
This is especially impressive given some of the drops in large-cap tech. Several of the largest stocks in the indexes are already in bear market territory.
We’re talking about multi-hundred-billion and trillion-dollar companies in serious decline. Here is where some of the big tech names stand today from their highs:
- Coinbase (COIN): -69%
- Oracle (ORCL): -57%
- Salesforce (CRM): -57%
- ServiceNow (NOW): -56%
- Netflix (NFLX): -48%
- Palantir (PLTR): -48%
- Microsoft (MSFT): -37%
- Meta (META): -32%
- Arm Holdings (ARM): -27%
- Broadcom (AVGO): -26%
- Marvell Technology (MRVL): -20%
- Nvidia (NVDA): -19%
- Amazon (AMZN): -19%
- Alphabet (GOOGL): -17%
Yet, despite this, we see nothing but strength.
The Nasdaq Composite continues to see more stocks making new highs than lows every day.
The percentage of stocks above their long-term 200-day moving average, which is a measure of market participation, continues to improve.
As of this morning, over 62% of stocks are above it.
The advance decline line – another indicator of overall market breadth – is also making new highs.
When the advance decline line runs ahead of the index, this is typically a sign of strength beneath the surface. Historically, it has signaled a continuation of the bull market trend.
The opposite was true in late 2021. The indexes were advancing while the advance decline line was flat. This signaled weakness. It was a warning to the pending bear market in 2022.
I don’t have a crystal ball. But every underlying metric I track points to higher prices in the second half of 2026.
I’m not saying it is justified. Stocks are, without question, trading at lofty valuations. But they were inflated in 1999 too, and the Nasdaq went on to double again before the 2000 correction.
The indexes made no progress in June. It has been a choppy month, trading back and forth in a 3% range from the highs.
But this is normal. In fact, it’s healthy. Stocks need to take a breath. They need to digest the last move, consolidate, and prepare for the next.
I’m glad a lot of the mega caps are down 20-50%. This will set up the next runs.
If I had to guess, this is what I think the market will do over the next few months.
I believe we will start July strong, absorb a little bit of supply near the highs, then press into new high ground late-July or early August. That would fit the pattern we have seen over the last couple years.
Anything could happen. President Trump could escalate things with Iran, start a new war, or something else out of left field. But if the worst is behind us, this is what I expect to see.
I am closely watching the sectors to see where money is rotating next. Semiconductor stocks are extended. The memory stocks that are up 1,000%+ may soon run out of steam. But the next big move is no doubt setting up. And I think there is a lot more money to be made in the market this year.
Best wishes for your trading,
