Stocks beating Bonds should be no surprise for those paying attention. Stocks are in a raging bull market. Bonds are in brutal a bear market. But you might be surprised by the extent of it (see chart below). The rolling 10-year annualized total return spread (i.e. including interest for bonds, dividends for stocks) of stocks vs bonds just cracked 15% —the highest since 1960 (and eclipsing the 1929 high). $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ Looking at the two series separately (below) we can see bonds making long-cycle lows, and stocks making long-cycle highs in real (CPI-adjusted) total returns. I think it’s important to emphasize the word cycle, because there does appear to be some rhyth

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（ $NVIDIA(NVDA)$ $Apple(AAPL)$

The chart below shows the highest country PE10 ratio across time [with revolving membership] (e.g. standouts: Japan in the 1980’s, Finland in 2000, China 2007, Colombia 2010, India 2024, and more recently Taiwan & Korea + USA). The countries represented in the red line changed often. The key point is throughout this period there has very often been a country trading on a PE10 ratio in excess of 40x, and on occasion much higher. Overall I would call this chart an exercise in imagination expansion…

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ The chart below should be studied carefully by every student of the markets. It tells us a lot about how markets move, how things change, how investors behave, and how to think about markets as a long-term active investor. You probably have a few of your own views and ideas when you look at this chart —but here’s some thoughts that come to mind for me: Investor Behavior: everyone wants to own stocks at the top (when valuations are high), few want to own them at the bottom (w

The US Commercial Real Estate (CRE) market has just been through its third major correction in 40 years. Indeed, the 2020’s downturn has been similar in magnitude to the early-90s downturn and 2008 crisis. But a couple of interesting things stand out. First, those other two major corrections in the commercial real estate market sowed the seeds for decadal booms (a possibility that is completely out of mind for most investors as sentiment on real estate remains deeply pessimistic). The other point of interest is that the bottom looks to already be in, and prices are stabilizing and ticking up again... While there may still be risks, this is the type of thing investors should pay particular attention to, and is exactly the type of setup I hunt for in my work at Topdown Charts. Bonus Chart: R

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2609(ESmain)$ This obscure sentiment indicator just sounded another topping signal. The chart shows the ratio of trading in leveraged long vs short US equity ETFs. It surges when people are disproportionately betting on upside, and collapses then greed gives way to fear and bearishness. As you can see in the chart below, spikes in the indicator have flagged several short-term peaks over the past couple decades. Meanwhile plunges have helped flag numerous market troughs. Like most market timing indicators it does slightly better at picking bottoms than tops (as you might expect dur

Chart: Bond Bear Market Bonds have been in a 6-year long bear market, with long-term treasuries seeing capital losses of -50% off the peak. Even after factoring in interest received and reinvested (but also adjusting for CPI), those who invested in $iShares 20+ Year Treasury Bond ETF(TLT)$ 20 years ago would be flat-to-negative on their investment. As a result, bonds are Unloved (consensus bearish sentiment), Undervalued (cheap on my indicators), and Underallocated (investor allocations to bonds are at 25-year lows). And I think this could be one of the biggest contrarian setups of our time…

The global economy has been riding the tailwinds from successive waves of monetary policy easing —and this has been a key factor behind the reacceleration we’ve seen this year (despite all that’s been going on in the world). But now those tailwinds are beginning to turn as central banks pivot back to rate hikes. With lingering upside risks to inflation, we’re likely to see more and more central banks pivot to rate hikes. So we’re going to be heading into 2027 with a distinctly different macro picture to that seen in 2026 as tailwinds turn to headwinds.

Chart in Focus: Software Relative Value Once prized for their repeatable reliable cashflows and solid pace of growth, software stocks have gone from trading at a major Premium —to now a material Discount vs the rest of tech. The market has jumped to the conclusion that software is a sunset industry in the AI-age (given AI makes coding easier, and has made some software applications obsolete; increasing the pace of disruption). And as we can see in the chart below, relative-valuations have reflected that sentiment almost overnight. But when I see charts like this I think: that’s an extreme, and extremes can be a great source of opportunity. +when I hear the grim prognosis for software I think: wait a minute, if AI is really that useful then why can’t software companies use it? Why can’t the

I sent a survey around yesterday asking what people think will be the biggest surprise for investors in H2 —and so far the top-voted candidate is “AI Bubble Burst”. Looking at some of the recent price action (e.g. the KOSPI is down -20% off the peak, the US SOX putting in a major topping pattern, Japan’s Softbank down -33%), I think they might be onto something. Which brings us to this week’s chart. It’s an update of the US Semiconductors market cap weight chart, which has pulled back from record highs. When I last featured this chart I mused: “semiconductors are in the bubble phase of the bull market (which is dangerous for both bulls and bears alike!)” That remains true, and the danger is that we are in the early stages of a bubble burst (they start with initial weakness; slowly at first

In terms of upsides and bullish-rotations, one area making big moves is small caps. After retesting its big breakout earlier this year small caps have had a strong run. And as previously outlined, small caps are trading on cheap valuations vs history (with good relative value vs bonds and vs large caps too). Thanks in part to passive index investing and the primacy of big tech, small caps have become a neglected part of the market e.g. ETF market share (implied allocations) and rolling net-fund-flows for small caps are ticking up off record lows. That is a classic contrarian bullish signal. On that basis, along with cheap valuations and bullish technicals, small caps likely have plenty of room to run from here (and offer a bright spot amongst the bearish banter).