Avoiding the lure of technical, trend-following strategies while expecting higher earnings growth and higher equity market prices has been rewarded in 2026… and pretty much every bull market cycle, but who am I to remind of such investing facts? The earnings trend should always be an investors’ “North Star.” As they go, so goes price over time. In other words, while “tape bomb” headlines fly overhead and daily, ultimately the market volatility will realign to reflect the earnings trend (chart via Creative Planning).
Market history tells a simple story. Stocks and earnings move together with a 98% correlation over time. The short run is all about noisy volatility. The long run is all about profits for corporations and their investors. Speculators chase noise. Investors follow profits. Pessimists sound smart. Optimists make money ✅ Remember that (~Michael Antonelli).
Within our macro-market Research Report on June 28th, we had warned of a great many quantitative studies that were likely to fail their positivity rate and most probable outcome by month-end. Rather than rehash old news, we’ll simply update the former warning by stating the following: “Indeed, a great many quantitative studies did in fact fail.” With that now out of the way, we’ll also remind investors/traders that the warning provided with it reasonable expectations that did not warrant fear and loathing, let alone greater concern over a greater market pullback/correction and absent an exogenous shock. Simply put, near-term quant study failures didn’t come with a call for dramatically cheaper prices, but a renewed uptrend. Recall the verbal data below in the post from Finom Group’s chief equity market strategist Seth Golden (via OddStats):
“The S&P 500 remains in a consolidation phase since its June 2nd peak. Based on the data above, this consolidation phase that started in June should not carry itself to a decline of -6% or more into July. Therefore, unless this is the first time in history, the S&P 500 would make a new all–time high in July, before a greater than -6% drop occurs. Could this prove the “first for everything”? Yes. Is that quantitative analysis or speculation? I think you know the answer to that question! With the aforementioned data and analysis, we can quantitatively suggest our case has been clearly evidenced and our suggestion is warranted: be on the lookout
for higher prices folks.”
With the aforementioned data historically quantified, Finom Group is of the opinion that before month-end July, the S&P 500 will achieve a new all-time high📈. Opinions are not guarantees, and that’s why we analyze data to surmise the most probable outcome and maintain appropriate expectations for price. Additionally, the risk to this outlook resides in the failed Memorandum of Understanding between the U.S./Iran, as well as unforeseeable exogenous shocks. Now buckle up and grab a Snickers bar, Seth is likely to keep you here for a while 😜 with like understandings and risks to the outlook.
Weight of the evidence 🏋️♀️
Easing into this weekend’s quantitative analysis and review of the data, I’ll (Seth Golden) simply piggy-back on the opening segment with the following quant study from Bluekurtic:
A lot has to go wrong and stay wrong for the fund flows to avoid delivering the Finom Group S&P 500 12-month forward price target objective of 7,800 by February 2027, and especially considering the 45-trading day rally of 20%, as evidenced in the quant study from above. After similar surges, the index was higher 1-month later in 12 of 13 cases, with a median gain of 4%. On the signal date, the S&P 500 closed at the all-time high of 7,609. If only based on this study, there’s a strong probability the S&P 500 will produce a new closing high as the month of July kicks into gear and with Q2 earnings season straight ahead.
And most investors/traders are well aware by now of the seasonally scheduled fund flows for July, as previously outlined:
” Probably more importantly is that July has delivered the second best returns of any month, only trailing that of November returns over the stated time period. Are we really not going to make it 13 years in a row; lucky
13? By the way, if it weren’t for 2024’s negative return, the Nasdaq 100(QQQ)has only delivered a negative return 1 time in the month of July going back 19 years (chart above).”
On a side note, I’m having some fun on X again, and using the Finom Group corporate X account @GroupFinom. Please follow for intra-week thoughts and analysis. When I suggest that I’m having fun, it’s largely due to sourcing more data to analyze, and drawing the conclusion that there remain and likely will always be misinformation and unqualified works proliferating on the X platform. As such, beware ⚠️.
Moreover, lets see if we can capture such social media misgivings and prove them to be so?
It appears that the closer the S&P 500 gets to the former June highs and recovers from the June lows, @CyclesFan is increasingly detracting from a belief that a new all-time high will not be achieved in July. The chart, which is NOT technical analysis, is defying or detracting from our former quantitative data and analytics. Which discipline wins out remains to be seen. With that being said, I’ll remind our Finom Group investors/traders that technicals do not predict the future, but inform of the past and what MAY be developing as determined by the personal engagement and experience of the engaged. This is where quantitative analysis has a leg-up on technicals. Quantitative analysis focuses on past occurrences of like price display and/or trend, while quantifying the probabilities from that price trend going forward. Quantitative analysis also relies less on the engaged experience and more so on basic mathematical comprehension and the ability to disassociate from market experience.
So maybe this segue won’t be so brief 🤪. Like Equity market futures proving dirty, filthy, liars with regards to daily open market session pricing, I may have lied when I insinuated “a side note.” Give me a little bit of latitude here people. This is where the education is rendered.
In the above we outlined quants informing that in order for the market not to make a new all-time high in July, it would prove the first pullback/correction that would have started in June since 1983. A super low probability, right? Also a fantastic trend of positive July returns dating back to at least 2010, right? Lastly, the 19%+ gain in 45-trading days price trend, which apparently is absent the chart’s recognition from CyclesFan? Well, not absent the chart, but the experience of the engaged CyclesFan. And that’s how quantitative analysis proves my former “NOT technical analysis”, by the way. Need further proof or evidence?
June all-time highs could have bulls smiling 😊 in July. Going back to 1950, every single instance where June produced at least 1 new all time high, it was followed by at least 1 new all time high in July in 16/17 occurrences (*1983). This quant was produced at the end of June, and now there is less than 1% to go for the S&P 500 to achieve a new all-time high. Who wants to go and inform CyclesFan? Who thinks CyclesFan would care? Some folks, despite the preponderance of evidence, will never be willing or able to adjust their methodological outlook in favor of defending the outlook. At best, they’ll simply agree to disagree, which holds no value, and fails the self-directed investor/trader.
To surmise the quantitative data above, the weight of the evidence doesn’t guarantee, but rather points toward a new all-time high in July, in contrast to the chart display from CyclesFan. In the same vein, let’s also take a look at the probabilities for July’s monthly return after a +10% gain heading into July.
The S&P 500 closed the Q2 of 2026 with a gain exceeding +10%. That puts 2026 in rare company. Since 1950, this has happened only 9 other times, and what followed those instances is worth paying attention, in my opinion.
The probabilities for a positive July return, even after a strong 1st half of the calendar year, remain elevated at nearly 78%. While not as strong as our other quantitative studies, still a favorable positivity rate even with a low significance score (small sample size). That being the case, we also don’t want to limit our outlook to just July. In the bottom study, it identifies that the 3rd quarter held up well in almost every case. Eight of nine times, the market posted a positive July through September, with a median Q3 gain of +7% and an average gain of +5.3%. The setup heading into the second half is historically one of the cleaner seasonal tailwinds the data offers. Additionally and to-date, the mid-Summer rally we had formerly discussed is well-and-positively under way.
Since June 26th, the S&P 500 has rallied nearly +3%. The mid-Summer rally period ends this coming Monday, the 9th trading day of July.
One more thing, and glancing back up to the quarterly performance quant study, when Q2 rallies greater than 10%: Every single one of those 9 occurrences ended the full year in positive territory, with a median annual gain of +25.8% and an average of +22.8%. That’s a spicy meata’ ball 🍝, as the saying goes. Another 10% in the 2nd half of the year would take the S&P 500 to around 8,300. In truth, that’s not my current expectation, but I favor the bullish trend evidenced by the data.
Moreover, in recognition of a negative Q1 and THEN recovering in Q2 by greater than +10%, we establish another quant recognizing these parameters from Jeff Hirsch of Trader’s Almanac:
After a down Q1, and 10%+ Q2, the S&P 500 is 6-for-6 the rest of the year since 1950. And yes, in the 6 prior years the S&P 500 would go on to finish higher in Q3, Q4, and the 2nd half of the calendar year. If the worst 2nd half performance is delivered in 2026 (1968), this still maths out to 7,821 at year-end for the benchmark index. And there you have another “weight of the evidence” supporting the Finom Group price target objective (annotations by Seth Golden).
Moreover and yes, after a powerful first half of the year the Nasdaq (COMPQ) has an equally positive quarter ahead, according to the Nautilus Research quantitative study below (100% positivity rate 3-months forward):
Lastly and to completely belabor the analysis, a near-term technical achievement by the S&P 500 might also have the bulls smiling 😀! Remember that there is no silver bullet indicator, pattern, or quant that guarantees the most probable thing to happen next in the markets. The markets are doing hundreds of things at all given points in time. With that in mind, it’s unreasonable to suggest that any investor is able to “cover every base”, even with a multitude of useful, but still not yet all-encompassing analytics. And having said that…
The bullish signs are firing up from all sides, according to our good friend Nikhith at Bluekurtic and the data. The S&P 500 finally had a bullish MACD crossover for the first time in over a month. Since the beginning of this bull market in late 2022, this has proven bullish and with a 100% win rate over the next 5 trading days, ie the coming week. Could this signal fail for the current bull market cycle? Certainly! But as always, that’s not how or why we quant; that’s speculation and the thing we desire to avoid as investors seeking repeatably profitable returns. Either way, this study doesn’t help the bearish case provided by CycleFan, and likely many other market participants.
A big data dump and earnings kick-off week lay directly ahead of investors. With the big-money center banks set to report on Tuesday alongside the monthly Consumer Price Index report. Investors may have been on edge and already well-hedged, according to the recent spike in the Put/Call Ratio.
I stand by what I said in the aforementioned recognition of the P/C Ratio spike, as well as Thierry’s post on X. It’s on X, it’s free and its “doom porn”. Historically, those “qualities” are the defined value of the post/information. But don’t take my word for it folks, let the data speak, as Nikhith jumped on this, also with quant data:
And that’s the value of the X doom porn-ing over the forward 1-week to 1-month period. The S&P 500 has been higher 91% of occurrences during the ongoing bull market. Something about pessimists sound smart, but optimists make money 💴 💰 ? Lot of data and analytics supporting higher prices hence forth. Lot of nonsense in the “socials.” Doesn’t look like nonsense with Nvidia (NVDA) shares recently correcting some 20% from their all-time highs set nearly 3 weeks ago, but let’s make the argument any ole’ how and way, shall we?
THE NVIDIA DEBATE
Again, CyclesFan is at odds with my outlook, and that’s okay. Difference of opinion is what makes a market, but that doesn’t help you make money. Managing cash wisely helps the self-directed investor make money, not managing risk. If one can’t manage cash, they can’t take risk, hence they can’t manage risk they can’t take in the first place.
NVIDIA is the world’s largest company by market cap, and is up just 8% YTD while trading near its lowest forward P/E Ratio in 7 years. By all valuation measures, that’s what we would historically recognize to be a “discount.” Here’s what we know about discounts, personally and markedly: 1) I’m not fearful of discounts. 2) The market usually doesn’t allow for the survival of such discounts.
Additionally, when we look at just the trailing 5-year average valuation metrics, all reside in the lower percentile ranges (bottom chart via Koyfin). EVERY. SINGLE. ONE!! Apparently, CyclesFan is of the opinion that, indeed, the discount will remain around for the forward 5 – 6-month period. The market will be that kind… or NVDA will have a less spectacular trending fundamental performance outlook when it delivers quarterly results. Mind you, that’s been the speculation ahead of every single quarterly report since Q4 of 2022, and yet all NVDA has done is deliver positive annual returns since Q4 2022.
As investors/traders get closer to the NVDA’s earnings release, also, let us be reminded that 20-days (roughly 1 trading month) leading up to the earnings release date, traders were rewarded by owning shares every single time, since Q4 2022 (Truist table).
Also take note from the data above; the August reporting cycle has delivered positive NVDA returns each time, but lesser than every other quarter, on average. We can also look at a chart of NVDA going back to 2022, the start of the bull market cycle, which is now the oldest bull market in history, not have originated from a recession. Just a “fun fact in case you should be on Jeopardy some day, and in case it is on the board!
From most angles, fundamentals, quantitative and/or technical, the evidence supports: 1) higher prices 2) sooner than later 3) all-time highs, at worst, by year-end). Others are welcome to their opinion, but opinions are only as valuable as their supportive evidence provides value.
I maintained a reduced and/or underweight position in shares of NVDA until most recently, and within the Golden Capital Portfolio. In Q4 of 2025, my objective was to lock-in profits on the name, but still own it long-term and into 2026. The long-term outlook hadn’t changed in Q4 of 2025, but rather the outlook for shares of AAPL were perceived more favorably. Hence, I maintained an overweight in AAPL shares since. Before furthering this comparative decision-making process, let’s not forget our longstanding quant regarding the May downtrend in shares of NVDA, via the following quant which remains “in play”.
This NVDA quant delivered the highest probability outcome (positive) 1-month forward, but failed to deliver on that same highest probability outcome 2 months forward (July 5th). This doesn’t mean we discard the quant or the quant, as a whole, failed. It means we continue to monitor the quant for future price probabilities and utility. More recently, investors had the opportunity to buy NVDA shares below the trigger date and price of this quant ($198s). What do you think I was doing with the share price below $198 recently, knowing that there’s an ~82% positivity rate in the forward 3-month period, as outlined in the table above?
That’s right, I was taking advantage of cheaper prices, as determined by the quant, let alone fundamental valuation metrics, and profitably (grammar teacher torture 😫). Look, I have the freedom to talk a lot of 💩 here. My cost average is in the double-digits ,and since buying/trading in March of 2025. Given the ability to synthesize market data, and then put that into action, one can reduce their cost average eventually to $0 dollars. Yes, and we’ve done it before here with core holdings at Finom Group. So indeed, I can talk tough and critique other market participants given the ability to not give a darn what happens with NVDA shares in the coming quarter. But that is also the difference between active portfolio management and posting 💩 on X, which the broader public can’t decipher and concerning their follower-ship. My point on even detracting from the already offered analysis and anecdote is to make investors/traders aware that follower-ship should carry some degree of knowledge about the individual being followed, how they are positioned and why? Absent that knowledge, your still left speculating on their posts, which is a behavior that fuels further speculation.
In formerly mentioning the underweighting of NVDA and overweighting of AAPL coming into 2026 and since…
Inside the Golden Capital Portfolio, I maintain both assets, recently re-leveraging NVDA and deleveraging AAPL. In fact, if you had done this throughout the year, and doing the math, you would have not only outperformed the benchmark indices, but also the Russell 2000 year-to-date. Deleveraging from NVDA at the highs and re-leveraging AAPL at the lows, and visa versa. It’s super funny in hindsight and in looking at the chart below of the two names, year-to-date:
As annotated in the charts, this strategy of buying and selling the two names at peaks and troughs that are in opposition of their respective trends would have compound their YTD returns by more than +16%. Yes, you might think this is easy to recognize in hindsight, but it was well-forecast since September of 2025, and a proven advantage from ACTIVE portfolio management. Well-forecast you say? Recall my formerly hacked @SethCL X account and our conversations on the subject matter inside the Finom Group daily live Trading Room, last year:
I‘m not well 🤒 or as my Father used to suggest, “That one, that one right there is touched with something, so don’t go touching him.” It’s fair, I mean who thinks about such things, let alone comes close or gets it right. Price targets, trends, will the Fed or won’t the Fed, all commonplace outlooks and considerations by the average or professional macro-market participant… but single stock ranking cap-weight and objective?
And yes, I will take it getting this close to recapturing the heaviest market-cap weighted stock in the S&P 500 as close enough. Having said that, I maintain the prior outlook. Such nuanced calls, conviction by way of positioning is a scary thing for most market participants to believe is possible, let alone being executed. It takes a sense of control away from individuals, knowing there is such efficacy out there, and absent the masses. Recall the forewarning of a single daily -2%+ return call from early June, and what happened almost immediately after the warning?
It’s hard to sell such actionable and accurate analysis, let alone such an investing/trading strategy that employs a 90% or greater annual hit rate. Trust me, while we greatly appreciate our Finom Group investors/traders as well as our Institutionally licensed partners, trying to offer such precision to the masses is always met with skepticism, if not outright disbelief and fear. But the worst part, the worst part is that in the face of the weight of the evidence, people engaging such a track record will argue, literally until they are red in the face and forced to employ character assassinations. When all else fails, talk about “they momma”.
Believe it or not, fiduciaries have a hippocratic oath akin to Doctors. Do what is in the best interest for your clients. The difference, however, between fiduciaries and doctors is opportunity costs can only prove speculative and health outcomes can be measured/quantified. So when a fiduciary suggests they are inclined to do what is in their client’s best interest and know that this exists…
… then why aren’t they doing this or recommending this (only total returns blocked)? This is what our Finom Group Premium members can achieve by way of our 300 trade alerts annually (on average), and at least. We have also demonstrated this in live videos to discern the reality. For all 1400+ trades executed to-date, the Golden Capital Portfolio has extrapolated a profit 95.36% of the time. In 2025, the final tally was just over 91%, at year-end.
The answer to the “why aren’t they…” question is very simple. The fiduciary and industry can’t quantify an abstract concept like opportunity cost, even when knowing that is exactly what they are selling to any client not achieving the annual benchmark rate of return on capital. Secondly, if they performed this strategy, there wouldn’t be an industry.
Moreover, we’ve heard it all before, “It’s not the hit rate that matters.” Absolute poppycock!
As we questioned the investing/trading quotes from the likes of Paul Tudor Jones, ask yourself how confident you would feel if losing on nearly 60% of your executed trades, to hold the 40% of trades for the 2:1 payoff. You’d really wait around for that, knowing that the majority of the time you’re in a losing trade… or are you likely to cut the winning trade short of the 2:1 payoff because you don’t want to give up any profitable trade? The math offered by The Rogue Quant is correct and can be backtested for efficacy. The problem with backtesting is you can’t go back in time and accrue those results, you’re trading in real-time, with real emotions, habits, and psychology. Those emotions, habits, and psychology are a 1:1 correlation to one’s hit rate: nothing else matters more to those factors than the hit rate… NOTHING! And it’s why you’ll never see the vast majority of public profile results. Lot of folks say stuff that sounds smart, but has no practical and/or anecdotal evidence to back it up. No, not even from those books and strategies employed by the so-called expert trend-following strategies.
So when I tell ya’ to expect a new all-time high NVDA share price before year-end… maybe you prefer the old colloquialism “you can take it to the bank” (absent exogenous shock). Absent exogenous shock, is that the only thing you caveat, the only detracting argument you got?
Got Jobs, May He R.I.P.
As we’ve long-since and accurately forecast, a recession is improbable without an exogenous/endogenous shock to the economy. There are no such things to be fashioned which indicate an economic recession lay ahead. Almost every single recession has been caused by an exogenous/endogenous shock-event. Not desiring to go into some longwinded diatribe on the subject matter again, we simply default to the trending labor market data, more specifically Jobless Claims.
In addition to being 1/2 of the “Quick and Dirty” economic forecasting system (the other 1/2 being S&P500), they have a 60 year history of being a good short leading indicator, if you wish to align with the failures of the text books.
For the week, initial claims declined -2,000 to 215,000, and the four week moving average declined -3,750 to 218,750. Continuing claims, with the typical one week lag, rose 8,000 to 1.814 million:
On the Y/Y% change basis more important for forecasting purposes, initial claims were down -5.7%, the 4-week average down -6.7%, and continuing claims down -7.1%: So, in the face of lesser over job growth as reported the prior week and via the BLS’ Nonfarm Payroll report, jobless claims continue to evidence a low fire-low fire and pretty tight labor market to boot 🥾 .
Simply put and to keep this segment of our weekly macro-market Research Report succinct and abbreviated, we don’t see a recession trending or on the horizon from within the labor markets’ data points, and with the unemployment rate still range-bound around 4.2%. While it’s true that the labor market is not the economy, the combination of the labor market and stock market are the best reflections of the economy, historically speaking. And don’t tell me the that market breadth is not a good indication of the 12-month forward economic standing? Based on the Zweig Breadth Thrust last year, what were the prospects for a recession through April of 2026? Was the data right?
Six of 8 stock market bellwether cylinders are currently firing. A traditional, narrow market top has NEVER happened with 6 of 8 bellwether signals. The S&P 500 is less than 1% away from its previous peak, likely to be the 7th or 8th bellwether firing bullish with a new high very soon, likely followed by the Financials (XLF) achieving a new high (Leuthold Group Bellwether chart).
Additionally, the Leuthold Group’s Quattro 40-WMA Model is bullish. Stock market bellwethers have, by and large, “endorsed” the market’s move higher in 2026. When the Dow Jones Transports, Dow Jones Utilities, NYSE A/D Line and Dow Jones Corporate Bond indices are all above their 40-WMA, the market topped an average of 8 months forward (update not featured).
In short, the market upswing is confirmed by Cyclicals (proxied by the Dow Transports), Defensives (Dow Utilities), Breadth (NYSE Weekly Advance/Decline Line), and Bonds (Dow Jones Corporate Bond Index). That configuration has been in place a little more than one-third of the time in the past 80+ years, and led to an S&P 500 average annualized compound return of +15%. Sound like the economy is close to a recession to you? The market is that wrong, and being led to the wrong economic conclusion by millions upon millions of investors/traders, and for this long? By the way, the aforementioned Bellwethers and Quattro 40-WMA Model are what is also historically referred to as a “broadening market.”
Additionally, when the Big 4 economic indicators remain with growth conditions, we suggest that timing of the next recession is a futile and disadvantageous exercise.
And so yes, I remain overweight AAPL, since you asked 😜 (but recently reduced from 3% overweight to 2.5% overweight) . The consumer remains in great health, as defined by a low-hire/low-fire labor market, and a strong balance sheet that is still yet flooded with cash. “But all-time high credit card debt and higher delinquency rates, Seth.” You know when that happens? During ongoing expansion cycles. More jobs equals more paychecks, equals more consumption, equals more debt. That’s how this whole thing WORKS! That’s not recessionary. You know what happens in recessions; trough credit card debt and trough delinquencies. But you’re hoping to avoid that recessionary-market downfall. Good luck with that! Logic works folks, logic works! Don’t be an arse-monkey, Seth 🙈 !
The following two household balance sheet charts evidence the aforementioned health of the consumer and consumer finances:
Could you imagine suggesting the consumer is strapped for cash with checkable (real accessible cash assets) at record levels 10X of any other period in history… to this day. Can you imagine suggesting the consumer is strained and stressed when the Household Debt Service as a Percent of Disposable Income is at historical lows and still hasn’t normalized to the former pre-Covid level, but in keeping with the Great Deleveraging of the Household balance sheet era. And they really wonder why the stock market and retail sales continue to grow?
The reason for evidencing retail sales via Johnson RedBook Retail Sales, going back 5 years, is to clearly show that even a consumer-based economy contributing some 70% to GDP doesn’t hold the prospects of a leading economic indicator, else you would have seen a recession in early 2024. Having said that, the prior household balance sheet charts essentially verify why retail sales continue to accelerate, in part, through 2026 (even when adjusted for inflation). Strapped, stressed, and strained for cash my arse 🫏 !
I’ll leave investors/traders with one last chart of economic indicators, which shows the thresholds for which to recognize a looming recession. According to our friends at Ned Davis Research, at least 6 of the 10 indicators need to achieve the critical thresholds to indicate a looming recession. The current tally is zero!
Agree To Disagree 😂
Because this week’s macro-market will be offered freely to the public, I don’t wish to get into too many technical renderings. Remember, I only do one of these public offerings a year. With that said, let’s update our former analysis which found disagreement for the Fundstrat S&P 500 pathway and price targets through 2026. Keep in mind that this is an exercise to lend supportive evidence for capital allocation decision-making.
Recall from back in May, the formerly offered Tom Lee S&P 500 pathway/outlook, and from within our May 17th exclusive report:
” Tom Lee of Fundstrat does believe another 15% to 20% correction is in the S&P 500’s future and before surging to close the year around 7,700. The data DOES NOT agree that we can get a 15+% decline AND still close at 7,700 and here’s why: “
There have been 21 years since 1965 that have had a –15+% decline (on a closing basis) and only 5 years that have gained more than 12.5% that calendar year. Only one of those 5 have their 15% decline in Q3 or later (1998 -which would be the case this year). And, only one of them ALSO had a 9+% decline that same calendar year separately and that was the COVID re-opening trade. NONE had BOTH a late correction and an additional deep pullback.
The average calendar year return for a year that had a 15+% decline is -5.25% with 14 losses (averaging -15.03% loss) and only 7 gains (with averaging 14.28% gain):
2025: +16.39%, 2022: -19.44%, 2020: +16.26%, 2018: -6.24%, 2011: -0.00%, 2010: +12.78%, 2008: -38.49%, 2002: -23.73%, 2001: -13.04%
2000: -10.14%, 1998: +26.67%, 1990: -6.56%, 1987: +2.03%, 1981: -9.73%, 1980: +25.77%, 1977: -11.50%, 1974: -29.72%, 1973: -17.37%,
1970: +0.10%, 1969: -11.36%, 1966: -13.09%.
Another reason why we wouldn’t agree with Tom Lee on the “-15+% decline then close the year at 7,700+ on SPX “ call is that we’ve NEVER had TWO years in a row having a 15+% decline and NOT have been in a bear market in that time (extended run below the 200-WEEK SMA). The only instances of consecutive years with -15%+ declines were, and all 4 were bear markets: 2000-02, 1980-81, 1973-74, and 1969-70.
IF we get a 15+% decline later this year, we are NOT likely going to close at 7,700 (historically speaking), and we are more likely going to be worrying about a break in early 2027 below the 200-week SMA. Hence, the probability of Tom Lee’s -15% to -20% correction proves a low probability outcome, and the difference between supporting your call with data as performed by Finom Group, and simply making a call, possibly predicated on macro-cyclical happenings.
Fast-forward to the most recent update from Tom Lee and since the 5% market pullback in June.
If there’s ever a good reason to revise one’s outlook/price target, it is certainly attached to the earnings trend. Hence, I agree with Tom’s latest price target adjustment, which essentially comes after we’ve long-since revised the Finom Group 12-month forward price target from 7,500 back in February to 7,800 back in May. Hey, we’re just happy to see more and more strategists aligning with our analysis, supporting higher prices.
Nonetheless, here is what the update looks like:
Tom Lee says that now we will hit up to 7,800 in the next couple of months before a meaningful -10-15% pullback, followed by a record-setting rally towards 8,000 by year-end 2026. In other numbers (via Heisenberg): 7,500 — > 7,800 7,800 — > 6,600-7,000 > 6,600-7,000 — > 8,000. With that update, I’ll remind investors that such a path has never happened before, given the greater than -15%+ correction in 2025 and already delivered -9% pullback in Q1 2026… without being in a bear market already.
With all of that being said, we like the idea of maintaining low expectations, ie a bigger correction. Let the market outperform low expectations, so long as the self-directed investor remains long the market, long-term. In that sentiment is why we favor Fundstrat and Tom Lee’s works when it comes to analyzing and forecasting macro-markets. Anything can come out of the blue, and prove a black swan. Maintain low expectations and be positioned for greater outcomes. It’s an Emotional Quotient thang! 😘
Closing out this weekend’s macro-market Research 🔬 Report, the broadening of the market and the breadth achievements in early July, favor index all-time highs ahead. Multiple indices achieved A/D Line all-time highs in late June and in early July. More importantly would be the NYSE A/D Line new all-time high achieved on July 6th, as noted in the table below and consistent with the Leuthold Group findings.
Historically, breadth can lead price higher. As it relates to the table above, when the NYSE A/D Line has achieved an all-time high, the median distance to the S&P 500 peak is measured in 30 weeks, roughly 7 months. Only twice did the NYSE A/D Line peak at the same time as the S&P 500, and one demanded a global pandemic. I’m not betting in favor of another pandemic, but rather new all-time highs in the S&P 500 in the not too distant future.
With the above data-supported outlook, I don’t envision the bull market ending, even as this proves the longest bull market in history not originating from a recession.
Inside the Finom Group Trading Room and in past macro-market Research Reports, I have evidenced the probabilities for the Financial sector ETF to achieve a new all-time high, and it barely missed doing so this past week (on a closing basis). As a reminder from within our June 21st report:
“I’ve been bullish on JPM since Q1 and the latest Q1 earnings release. Unfortunately, I haven’t been able to see my downside price target of $292 achieved in the last several months whereby I would have been a buyer and builder of a long-term position. Instead, I chased a little higher and had a few good scalp trades. Since then, however, the share price has rocketed higher, as I expected higher prices. While the larger Financials sector (XLF) has underperformed in 2026 (-2.2% YTD return), I am more bullish on the sector for the back half of 2026, as both the Regional Bank sector (KRE) and Small-cap Financials (PSCF) are outperforming the XLF.
It’s hard to imagine that with these smaller areas of the Financial and Banking industries at or near all-time highs, there wouldn’t be some catch-up and improved participation from Large-cap banks and the XLF. Having said that, I certainly hope that my former suggestion favoring JPM found it’s way into your portfolio in the trailing months, with profits being found June 2026.”
This outlook has proven rewarding since, and still remains an objective outlook. As a reminder, the Financials are part of the Bellwether indices, so the following data from Bluekurtic indicating upside also for the S&P 500 should come as no surprise. Remember that the Financials are the 2nd most heavily weighted sector in the S&P 500.
As the data informs: the S&P Financials are close to a new all-time high. Looking back at history, when Financials were within 5% of the ATH, the S&P 500 was higher a year later EVERY. SINGLE. TIME. I’ll remind you here that I don’t think the bull market is coming to an end, any time soon, even if it yields a normal and to-be-expected pullback/correction in 2026 and 2027.
Indeed, I bought some XLF this past week, and have already taken some profits, while choosing to let the rest play out according to the longer-term Financial sector outlook (trade disseminated via Finom Group Telegram Trader’s Corner). This is only a trading vehicle for me until further notice.
That further notice could come with a sector pullback, possibly through earnings season and after achieving all-time highs. The sector is quite overheated presently, and as the chart post via X evidenced this past trading week Friday:
Going into bank reporting season, Financials’ breadth is getting quite overheated. The Percentage of Stocks Above their 20-EMA is above 90%, where the sector has faltered in the past, even if not immediately. There may still yet be one more push to all-time highs. If Financials can’t find a record-level high through earnings season, no worries. It will prove a win either way, as I’ll be able to re-leverage my exposure, as breadth leads price and the Financials A/D Line is at an all-time high.
In mentioning A/D Lines, it shouldn’t go unrecognized that the Nasdaq 100’s A/D Line also recently made an all-time high… without the Nasdaq 100 itself doing so for almost a month now. In the technical world, they call that a bullish breadth divergence. The chart below evidences this divergence, which is coming from the index’s longest divergence since Covid, if not history.
After a 4-month long bullish NDX A/D Line divergence from December of 2025, we now have another bullish divergence. Historically, A/D Line divergences lead to all-time highs at the index-level, and I don’t expect this divergence to prove any different. How long will this one take is the wrong question. But we can answer that question too (did you really end a sentence with too?).
All such breadth divergences in the past led to new all-time highs for NDX/QQQ, with the median duration until the all-time high equaling two weeks. Well, this divergence from price is nearly a full month, so any day now…? Best way to absorb the data practically, is that any price below the all-time high is a buying opportunity with a historical 100% hit rate surrounding index breadth at all-time highs. All it demands is cash and time.
Rando-Charts 📊
Last week, we alerted investors and traders to the probability of Technology and/or Semiconductors breaking below their 50-DMA. Wouldn’t you know it… But they successfully tested the interim moving average to finish above it by week-end.
It would have proven wise to buy Semis/Tech when they tested the 50-DMA. We think you’ll get another pullback opportunity ahead of the Midterm-Election. If you failed to buy the dip where the earnings have proven the strongest; don’t make the same mistake twice.
The following chart is showing the indicator that tracks the longer-term trend of the market, and there is no sign of market trend weakness in this chart at the moment. For Finom Group investors and traders, they understand this chart to be my favored buy-the-dip indicator, and every dip at that.
Based on the following chart, I’m guessing these stocks could be headed higher in the coming months. The price of this ETF touched the uptrend line and found support. But my “Wowsa” chart will be the second to last chart rendering of this report.
Is this a market bubble, the whole AI Boom? No, not technically as it has NOT achieved the necessary bubble qualities. There’s only a bubble in one industry and/or stocks associated with it, Semiconductors. As we’ve evidenced in the past, the semiconductor industry is the area of the market that has qualified and quantified bubble achievements, reached late 2025 and carried forward to-date.
Indeed, SOXX/SMH achieved the bubble definition established in the Greenwood works, and outlined in Ned Davis Research reporting. Having said that, M/M billings have been a greater indication of a peak for the industry in past cycles. While I wouldn’t be prepared to call a peak in the Semiconductor industry at this time, the 3-month 88% rally likely skews the risk/reward profile unfavorably. There’s a risk of missing more upside and a risk of losing discipline, if overweighting, knowing the technical risk profile at this juncture. We’re keeping it simple inside the Golden Capital Portfolio and playing it against the diversification model, by investing for the long haul in NVDA shares.
Not declaring or succumbing to the bubble rants from the bearish crowd does not suggest that I’m unaware of the outsized market returns stretching into year 4 of the bull market. Each of these years has captured double-digit returns, possibly replicating such returns again in 2026. That kind of streak for double-digit annual gains is rare, and usually breaks long-term trend channels, as evidenced in the chart below:
The S&P 500 has officially broken out and above the long-term index trend channel, and has remained above the channel for nearly 12 months. While each time the index managed to breakout and above the trend channel it was met with dramatic bear market declines, the timing of the peak and those declines varied. There may be consolidation in the coming quarters, even breaking back down inside the long-term trend channel, but ultimately the bull market has an extremely high probability of surviving such consolidation periods into and through the first half of 2027 as evidenced by the perfect track record for the Midterm Election Day quant offered below:
The bull market retains its foundation, now bolstered by healthier breadth and ongoing fundamental strength. Near-term rotations and geopolitical developments may create tactical volatility, but they do not appear to be derailing the larger uptrend. Opportunities exist in recently de-rated leaders, while other sectors benefit from the current shift in leadership. Rotation is the lifeblood of a bull market, as the saying goes and price proves.
As always, we’ll continue to monitor the key drivers on both a short- and intermediate-term basis. Cash management remains paramount given the elevated valuations, but the weight of the evidence continues to lean positive for patient, disciplined investors.
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