“When the markets outperforms the probabilities, pay attention!“
– Seth Golden, Chief Market Strategist at FinomGroup.com (Contributor/Premium Members Only)
Mid-week Summary
Wednesday, August 6th, 2025
Welcome to Market Mania!
Where every headline is a twist, and the only constant is surprise.
After a record-breaking July that brought the S&P 500 to its fifteenth (since 1929, has never stopped at 15) yearly record high, August is already living up to its reputation for turbulence. The index is trading near 6,300, off recent peaks, as volatility has surged back into focus. Markets just snapped a four-day losing streak but still closed Tuesday in the red, weighed down by fresh tariff anxiety, soft economic data (ISM), and renewed questions about the strength of the recovery.
Earnings season is in full swing, with most companies still beating expectations, though the tone is less euphoric as forward guidance gets more cautious and leadership grows even narrower. Mega-cap tech is still pulling the heaviest weight, while defensives and industrials are trying to fill the gaps.
Meanwhile, the Fed remains parked on the sidelines, holding rates steady for a seventh straight meeting and signaling no rush to cut, because they can! Powell’s “higher for longer” approach, plus growing doubts about September or year-end cuts, has markets viciously repricing risk, while fresh Trump-era Copper/Pharmaceutical tariffs stoke fears of stickier inflation and slower growth.
Despite the chop, market returns in July finished solidly positive, with the S&P returning 2.2% last month and nearly 8% year-to-date. Yet, sentiment remains fragile, hedging activity is ticking up, and August’s seasonal headwinds remain in play.
For active investors and allocators, the message is clear: process, discipline, and data-driven flexibility matter more than ever. Macro surprises and policy uncertainty may rattle nerves, but effective positioning is still about balancing opportunity with risk management—never prediction over preparation.
The current bull is the only one which has lived entirely under a total policy contraction. The average bull since 1950 had only 1 month with a negative TPS. Should investors exit this bull just when the Fed may finally be bringing the punch bowl. https://t.co/cmZvbGqspf pic.twitter.com/l4819Hn3ai
— Jim Paulsen (@jimwpaulsen) August 5, 2025
In a recent X post, veteran strategist Jim Paulsen pointed out something most investors may be underestimating: the market may not have even started its real bull run. Paulsen argues that, despite the S&P 500 sitting near all-time highs, many classic tailwinds haven’t been activated yet, like monetary easing, stronger earnings participation beyond mega-caps, and robust breadth. His key point: if and when these macro supports arrive, they could kick off a new leg higher that few are positioned for.
In his words, there’s a “plethora of supports yet to be unleashed” if the Fed shifts course or growth momentum broadens out. That means while sentiment feels tired and leadership appears stretched, the runway ahead may still be much longer (IF the right catalysts emerge) barring any fruther ENDOGENY/EXOGENY of course…
It’s a good reminder that feeling late doesn’t always mean the runway is gone. Markets don’t move on exhaustion; they move on catalysts. And many of those may still lie ahead.
As forecasted by Finom Group, August kicked off with the return of volatility, validating our view that markets were due for a recalibration following a prolonged and steep rally. The multi-month streak above the 20-day moving average has finally ended, and we are now in the midst of 2025’s second Volatility Adjusted Risk (VAR) window, an expected phase in our broader playbook.
Breadth deterioration, elevated new 52-week lows, and the breakdown of key moving averages across major indexes all confirm that price consolidation is underway. Yet, context is everything. Quantitative studies still overwhelmingly favor higher highs into late Q3 and Q4, and history shows that similar fast, steep rallies in prior cycles have consistently been followed by strong forward returns.
From macro data to Fundstrat’s updated projections, the weight of evidence suggests we are in a temporary shakeout, NOT the start of something more sinister. This market pullback, while uncomfortable for many, was both overdue and healthy. The S&P 500’s reaction to July’s softer job report, paired with sticky but stable inflation, has given the Fed added justification for its continued pause and markets that much more reason to recalibrate.
Add it all up, and the message is clear: behavior matters more than headlines. This consolidation phase is an opportunity, not a warning shot. As always, process and preparation matter most in times of added uncertainty.
Stick to the plan.
Down is good. Up is simply better. 💯
Stay tuned as we cut through the noise, break down this week’s big earnings, and spotlight the signals that matter across ever-shifting markets.
TLDR: The script keeps changing, but our approach doesn’t. Smart analysis, sharp process, better outcomes.🤝
Here’s what’s catching the eye of the sharpest minds in the market today!
Chart(s) of the Week
🏆 Today’s Chart of the Week was shared by Frank Cappalleri (@FrankCappalleri):
$SMH Semiconductors
New all-time high last month 📈 — look familiar?
The chart shows 5 prior multi-year breakouts to new all-time highs.
Only one failed to hold the breakout point (COVID crash).
So…
If SMH can keep climbing from this recent breakout zone, history… pic.twitter.com/bTAE0eSiV7
— Frank Cappelleri (@FrankCappelleri) August 4, 2025
Every so often, the market delivers a technical moment that feels more like a chapter in a longer novel than a footnote. That’s what we’re witnessing now with the VanEck Semiconductor ETF, $SMH, as Frank Cappelleri’s latest chart illustrates. In July, $SMH broke free from months of consolidating and pressed up into new all-time highs, placing itself among a select group of historic sector breakouts.
It’s easy to overlook these events in real time. After all, new highs often spark debate. Some see them as a finish line, others as just another hiccup in an overstretched market. But when you step back, Cappelleri’s perspective brings out a crucial pattern: every major multi-year breakout in $SMH’s history has unfolded as both a signal of persistent sector strength and a catalyst for the next act in the market’s broader drama.
In past cycles (think 2003, 2009, 2013, and more recently, 2020 and 2023), these breakouts have rarely meant “game over.” Instead, they’ve typically marked a reset in leadership, where periods of explosive momentum are followed by short bouts of consolidation and then renewed runs as market conviction deepens. What sets this year apart is the backdrop: even amidst anxiety about rate policy, cyclical headwinds, and choppier tape elsewhere, semiconductors continue to command premium attention and attract large-scale flows.
This isn’t just about price. Each breakout has signaled that something structural is underway. Whether it’s a new wave of AI spending, global tech supply chain shifts, or the broader transition to a digitized economy. These aren’t trends that run out in a quarter or two. They unfold across years, sometimes decades, and reward those able to distinguish true leadership from the usual noise.
So if you find yourself staring at the SMH/NVDA chart and fearing it’s “too far, too fast,” remember history’s script. Multi-year highs like these tend to reset the board for what comes next, not end the game. They bring in new capital, test investor stamina through normal pullbacks, and often lead to broadening participation within the sector itself. The smart play isn’t to guess when it all reverses, but to stay attentive… letting the trend, not emotion, guide your next deployment and/or profit-taking of capital.
Frank’s chart, in this sense, reads more like the start of a new chapter than an epilogue.
Sometimes, the water only looks still before the next current picks up. 🌊
BONUS:
"We think U.S. corporate strength could cushion the blow [of tariffs] and stay overweight the AI theme and U.S. stocks…" @BlackRock pic.twitter.com/medGp1tiyV
— Sam Ro 📈 (@SamRo) August 4, 2025
Earnings. Drive. Markets. Higher. OVER. TIME.
(pick your poison)
Quote(s) of The Week
“People with very high expectations have very low resilience.
And unfortunately, resilience matters in success.
I don’t know how to teach it to you except for, I hope suffering happens to you.”
– Jensen Huangpic.twitter.com/O6nJkz1YjL
— Finom Group AYNI Luis Solórzano (@aynirealtor) August 3, 2025
BONUS:
A study with over 70K people found those who obsess about being the best have much worse outcomes than those who are focused on being the best at getting better, and who define success on their own terms. pic.twitter.com/SVzhhB5ux9
— Brad Stulberg (@BStulberg) August 4, 2025
Anyone have that CORNELL study on how 85% of your worries never happen handy? Search bar folks! 😉 ✅
“The doers are the major thinkers.”
— Steve Jobs pic.twitter.com/iQzbthQ3MH
— Reads with Ravi (@readswithravi) July 30, 2025
“The doers are the major thinkers. The people that really create the things that change this industry are both the thinker and doer in one person. And if we really go back and examine, did Leonardo have a guy off to the side who was thinking five years out in the future what he would paint or the technology he’d use to paint it? Of course not. Leonardo was an artist but also mixed all his own paints. He also was a fairly good chemist, knew about pigments, knew about human anatomy. And combining all of those skills together, the art and the science, the thinking and the doing, was what resulted in the exceptional result. And there is no difference in our industry. The people that have really made the contributions have been the thinkers and the doers. It’s very easy to take credit for thinking. Doing is more concrete. But somebody, it’s very easy for someone to say, oh, I thought of this three years ago. But usually, when you dig a little deeper, you find that the people who did this were also the people that really worked through the hard intellectual problems as well.”– Steve Jobs
If you're feeling lost in life, watch this: pic.twitter.com/jzGEk6WEoZ
— Mindset Machine (@Mindset_Machine) July 30, 2025
“There are a lot of negative things in the world. There’s a lot of terrible things that are happening all over the world, all the time. There’re lots of problems that need to get solved. Lots of things that are miserable and can get you down. Yeah, they’re miserable, but then, life cannot just be about solving one miserable problem after another. Can’t… It can’t be the only thing. There need to be things that inspire you, that make you glad to wake up in the morning and be part of humanity. Earth is the cradle of humanity, but you cannot stay in the cradle forever. It is time to go forth, become a star-faring civilization, be out there among the stars, expand the scope and scale of human consciousness. I find it incredibly exciting. That makes me glad to be alive. I hope you feel the same way.”– Elon Musk
The Four Habits of a Truly Happy Life. pic.twitter.com/ICf1BIoKQl
— Mindset Machine (@Mindset_Machine) August 2, 2025
“The happiest people, they do four things every day. Every day. They practice their faith. They are close to their families. They have friends—real friends, not deal-friends—real friends. And they take their work seriously, of which is, of course, your bailiwick. This is your kettle of fish. And they get meaning from their work, which really comes from feeling like they’re earning their success, creating value, and serving other people. Those four things are the secrets to the happiest life. That’s what you need. Those are the happiness habits.”– Arthur Brooks
Price action shapes attitude.#finance #wallstreet #bullrun #stockmarket pic.twitter.com/YRn8a2vn06
— Steve Eisman (@realsteveeisman) July 15, 2025
“Price action shapes attitude. What you think is simply a function of what has happened and for a market that’s up 25% over three months off the lows, I would expect attitudes to be much more euphoric, much more ebullient but they’re not. Think about why? Look at the news flow over the last month. It was only a month ago the debt got downgraded. Tax bill is going blow-off the deficit or two weeks removed from the bombs flying in the Middle East we have the news today about Japanese and Koreans on tariff front there’s a lot of headlines out that I think are almost prohibitive sentiment from matching where it should be given price action.”– Chris Verrone
Top 10 Tweets of The Week
“The setup for stagflation is increasingly probable…but remember… markets speak, and policy shifts.
For as long as the market has recovered for what is 3 months now. It has given, no reason for the policy to shift.
Year 5 of an expansion cycle so obviously LATE CYCLE
Makes you think that we’re setup for a recession…
It’s not that the markets wrong, it’s just that it doesn’t do a good job at pricing an actual recession to the downside
Prices fears, prices growth scares, but #recessions not so much ….
The one thing it has a 100% track record of doing is pricing continued expansion cycles. It has NEVER. BEEN. WRONG.”
– Seth Golden
Services #ISM now screaming LATE-CYCLE #STAGFLATION. Prices going up and New Orders going down. Not seen in ~18 years since before the GFC. pic.twitter.com/TDd6Re9XE2
— Richard Bernstein Advisors (@RBAdvisors) August 5, 2025
Monkey see , Monkey do! 🙈
The Treasury reported roughly $500B of new issuances will go toward refilling the Treasury General Account (TGA). This acts as a drag on liquidity.
Notice the two other recent periods under Secretary Yellen when the TGA was refilled risk assets came under pressure during each… pic.twitter.com/1z1NNBd713
— Jordan Lindsey (@TradersMastery) August 5, 2025
#CreditCards Delinquency rate is at its lowest level, and declining Y/Y, since Q1 2022. That’s not what I would call #recession risk and/or a stretched #consumer/household.
I hope the chart wasn’t “news” to you? If it were, you may not have been paying attention for the last 15 years? After all, it’s only been the greatest deleveraging period in history? Literally the healthiest household balance sheet in history. If you’re also still wondering how we’ve avoided a recession after the fastest and steepest rate hiking cycle in history, look no further.
Household debt outstanding as a share of US GDP is down over the past decade
Lowest since 2002 pic.twitter.com/cJp5TPuwKB
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) August 3, 2025
Are you wasting time reading another “zero brain 🧠🪦 dead newsletter”? Think so me not!
Some men cannot give up their fantasy of housing from 2008; it’s all due to reading zero brain dead newsletters, leading them to retreat to their fantasy. https://t.co/CK5V7XZ7mM pic.twitter.com/OJmiuf2t8U
— Logan Mohtashami (@LoganMohtashami) August 3, 2025
Charts do not speak, they simply inform of the past and what is developing. People speak their bias and/or experience.
DIVERGENCES, not timing tools! Ring a bell? 🛎️
So many misnomers and colloquialisms that make absolutely no sense. A belief system without truth, however, is where most fail to find themselves because they have lots of company and confirmation bias surrounding the belief.
S&P 500: 2008 vs. 2025🚨
CRASH WARNING⚠️
Yields and debt are trending higher. The Buffett Indicator is off the charts, and the Shiller P/E ratio is the second most overvalued in history, nearing 2000 bubble levels.
Lots of skeletons hidden in the closet.
Scary?
You decide. pic.twitter.com/5o5YxnOmoj
— The Great Martis (@great_martis) July 28, 2025
History doesn’t always repeat, although it does often rhyme!
Two weeks ago the S&P 500 closed at a new all-time high all five days (Monday – Friday).
Last week it closed lower than the open all five days (Monday – Friday).
That is the first time in history that has ever happened (using reliable intra-day data back to 1970). pic.twitter.com/sAoNwGXBEC
— Ryan Detrick, CMT (@RyanDetrick) August 4, 2025
Remember the “TRUMP PUT”? Better known as, “TRUMP (VIX) CALL” …
Goldman: total institutional short positioning remains not far off from the post “liberation” day peak. Over the same time frame, institutional longs in VIX futures have accelerated meaningfully (+$8mm vega), reaching levels last seen in 2023 (Chart 1). Thus flows exhibit some… pic.twitter.com/1uWaqKwe2C
— Neil Sethi (@neilksethi) August 3, 2025
And now for the quant:
Since the end of the global financial crisis, the $VIX's Bollinger Bands compressed this tightly 5 other times. Within next 4 months, VIX jumped by more than 50% EVERY. SINGLE. TIME.
It's even more unusual to see VIX this compressed during July-August.… https://t.co/Qnsyaa890X pic.twitter.com/5FZWeGzxyT
— Seth Golden (@SethCL) July 29, 2025
A reminder of why you DON’T want or need to be a stock picker! Odds are, your stock is on its way to being delisted, not that you are the unicorn 🦄 stock picker ✔️
According to a SURVEY by Morgan Stanley investor compliance remains #1 reason investors fail to achieve their goals.
Most investors, no matter our recommended basket of ETFs, most investors still gravitate toward individual stocks. Most individual stocks fail to market perform!… pic.twitter.com/MIkCYHJzgK
— Seth Golden (@SethCL) July 29, 2025
YOU DO YOU, IM’A DO ME ‼
It’s called a breadth thrust, not a breadth stop 🛑
Choosing to get off the train 🚂 just because $SPX gained 10% from the lows is not a demonstration of discipline but rather “breakeven-itis” disease that many traders/investors suffer! $SPY $ES_F $QQQ https://t.co/WTs4Og5A96— Seth Golden (@SethCL) July 28, 2025
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