Has the S&P 500 peaked or is the next bull run just beginning

You can catch Trader Talk on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts.

Is the market rally running out of steam? On Trader Talk, veteran market technician Mark Newton of Fundstrat joins Kenny Polcari to dissect what drives the S&P 500 (^GSPC). Newton explains why the equal-weight index tells a different story, how seasonal trends could trigger a short-term pullback, and what sectors may quietly lead the next leg higher. They dive into momentum, sentiment, and why inflation fears could fade fast if oil (CL=F, BZ=F) keeps sliding.

Watch more episodes of Trader Talk here.

Trader Talk with Kenny Polcari on Yahoo Finance delivers expert analysis and actionable insights, empowering you to navigate market volatility and secure your financial future.

This post was written by Langston Sessoms.

Video Transcript

0:05 spk_0

Welcome to Trader Talk, where we dish out the latest Wall Street buzz to keep your portfolio sizzling. I'm Kenny Polcari, and I'm coming to you live from the Yahoo Finance headquarters in the heart of New York City, a global hub where deals are made, fortunes are built, and the next market move is always just around the corner. Coming up, I'm going to share my thoughts on the government shutdown, and I'm gonna chat with my very good friend Mark Newton, and then I'm gonna share my veta di verdure recipe. Now, let's jump into the big take.You'd think with Washington grinding to a halt, that the markets would be panicking. Headlines are screaming about furloughed workers and stalled programs and political chaos. Yet, the S&P keeps humming near record highs. Volatility is asleep, and traders are acting like there's absolutely nothing happening. So what gives? The short answer? The market has seen this movie before and it never ends the way that the headlines predict.Historically, government shutdowns make great TV, but they barely dent corporate profits or consumer demand. Markets trade through them because investors know the political theater always ends the same way with a deal, a press conference, and another round of finger pointing. In the meantime, liquidity stays high, earnings stay on track, and the Fed, not Congress, remains the real driver of market direction. The deeper reason the market doesn't care.Investors have learned to tune out the noise and focus on the data that actually moves money. GDP growth is stable, unemployment is low, and inflation, while sticky, isn't spiraling out of control, at least not yet. For traders, that's what matters. The shutdown may rattle headlines, but it doesn't rewrite the balance sheets. Until it does, the algos will keep buying. For investors to take awayDon't confuse the drama with danger. Political noise can shake the sentiment, but fundamentals drive returns. Use moments like this to stay levelheaded, while others overreact. History shows that the best trades often come when someone else is distracted by the DC chaos. The bottom line, the market doesn't care about the shutdown because it knows how the story is going to end. Politicians fight and cameras roll, and the market quietly keeps moving forward. The smart money knows better than to trade the noise.I would love to introduce you to my next guest who happens to be a very dear friend of mine and was a former member of the New York Stock Exchange with me for, well, I won't tell you how many years. Anyway, Mark Newton is now managing director and global head of technical strategy at Fundstrack Global Advisors. Mark is one of the most respected technical analysts on Wall Street, known for his very deep understanding of market structure, price action, and investor sentiment. With decades of experience in.Analysis and market forecasting. He helps investors navigate short and long-term trends across equities, commodities, and the macro assets. His work at Fund Strat provides clients with the tactical edge that they need in fast moving markets. Please, ladies and gentlemen, join me in welcoming Mark to the discussion. Mark, it's a pleasure to have you guys. I love you. You have no idea. I'm so glad that we have this chance to come back together.

3:18 spk_1

A warm welcome, so I appreciate all that after

3:20 spk_0

all those years on the.Floor. So listen, let's start because there's a lot going on right now, right? So the government shut down all that stuff. But let's first talk about the seasonal patterns, um, and kind of historical data and what that says about 4th quarter performance and market behavior. Look,

3:34 spk_1

seasonallyspeaking, normally the period between August and October is, is down. When you have an incumbent president, somebody who's been re-elected successfully, usually this period is a little bit better than normally. and that's one thing. We have a new leadership, important to study what happens in seasonality.In post-election years with a Democratic leadership that's, that's all really a new change of leadership. And in this case, you know, we, we, it's proven to be resilient. And also, let's not forget the sential pattern, you know, we are in the 5th year of a decade. That's almost always very, very bullish and very positive. Well,

4:05 spk_0

you know what I find interesting because I was one of those people that thought that, you know, as you move through the summer into August and September, that we were going to have, you know, some market weakness, not a disaster, but a pullback maybe we had none of it.And I'm wondering if there were a lot of people that were kind of waiting for that opportunity that never came. Now we're into October. We, you know, you get, we're in the 4th quarter. Uh, you got the end of the year coming that you got all these people that were waiting maybe on the side that have all this money to have to put to work, right? And so now, because that's what it feels like to me. Yeah,

4:38 spk_1

look, we went from a period of extreme fear in April to now more, you know.I don't really want to be invested. I'll begrudgingly get along, but I don't really believe it. I think tariffs are going to be a big deal. There's going to be inflation, and look, none of that's materialized. The benefit of using technical analysis, we're always able to ignore all the noise, to your earlier point. You don't want to pay attention to exogenous events. You want to look.Leadership, what's happening with cycles, trends, seasonality, uh, and most importantly, potentially, you know, sentiment. Are people really, really negative enough to, to cause a bottom? They were in April. Are they now bullish enough to think that markets can peek out? And I would say the answer to that isYou know, there's still really not all that much evidence, either on an institutional side or on a retail side to think that the people are all in and that's going to produce a market sell off.

5:28 spk_0

Ifthe sentiment goes too bullish, that's actually could be a contrarianindicator.

5:32 spk_1

Yeah, that's the one indicator you want to always pay attention to. And, you know, we have seen some evidence in the last few weeks of sentiment getting a little bit more into like upper neutral territory. Equity put the call, got to the mid-40s. That's not a great sign. We see two calls being bought for every put.Normally that can happen. We did see a 3 day pullback right after Rosh Hashanah. Of course, it was short-lived, not just some of what we've seen every other month in the last 5 months. You look at September, you look at August July June 3 or 5 day correction and then right back to the races. So is this month any different? I would say the one thing that's interesting to me is thatAll these people waiting, waiting, waiting, who's gonna pull back. It didn't. Now all of a sudden they think we're in Q4. Now is the time we can go all in because the worst is behind us. We know the path of the Fed. We know what's going on. Earnings are great. The AI boom is with us and, and clearly judging by AMD any of these companies are here in the last couple of weeks, very much probably in the early innings. You look at what's happened to the quantum stocks, people are like, I, I can't stand out any longer. I gotta get in. And, and so I, I am a little more.Concerned that it's probably gonna be a choppier 4 to 6 weeks before we truly can can make progress between probably November and January, honestly, yeah.

6:44 spk_0

So I, I'm still in the camp that look, we're we're in the 2nd week of October. Earnings are going to start, you know, in earnest next week, but you, you're gonna get Pepsi and Delta Airlines at the end of this week.Oh, they're not our names, so it's not officially, right? JP Morgan will kick it off. But I am in the camp that I'm, while I'm invested, right? I'm not saying to anybody, oh, you should sell your stocks, not at all. I'm invested and I've been cautious, but I've been cautiously, I continue to invest because I'm looking for the other opportunity. I'm not chasing tech. We already own it. I already own it. I'm not chasing it up here, but there are other places in the market where you can.Find.

7:20 spk_1

Yeah, look, to your point, after moving sideways for about 2.5 months, the eco-rated S&P literally just moved back to new all-time highs last week. So that is your financials, your healthcare, your industrials. We saw a breakout in transports last week. You're finally starting to get healthcare is an unusual sector. We think that there's all this attack on drug pricing, and it's gone straight down for about 2.5 years in relative terms, but, you know, a healthy balance at a time whenYou know, people say, why is healthcare balancing? Um, if anything, it's been biotechnology and honestly, that's led as small caps have come back to life. That's really fueled some parts of healthcare that people aren't paying attention. Well,

7:56 spk_0

I think you're right, but I also think, you know, the deal that Trump made last week with Pfizer, I think was obviously something that lit helped to light some of the healthcare names on fire, or at least a sector on fire, right? Healthcare

8:08 spk_1

remains in the crossfires of of both parties and we honestly.need to do something. I would, I would say that's not wrong to think that we want to see drug prices be made more affordable to Americans,

8:19 spk_0

right. And I think that was, I think that was kind of that, that Pfizer story that came out last week. Uh, I, I think it was very positive. And actually I think we saw the sector move substantially that day or the day after, uh, or going into it. There was, you know, all that

8:31 spk_1

the administration has taken a willingness to invest in companies that he thinks are viable, that he wants to see.and and and Pfizer, along with, of course, Intel and and and it's unprecedented, but, uh, you know, it's certainly worked. It's helped to buoy our market at a time when everybody thinks we're rolling over.

8:46 spk_0

So I want to do one thing just so the audience understands define for them when you say the equal weight S&P, what the difference between that, what that and the S&P is, right?

8:56 spk_1

So let's take the S&P. So 8% is Nvidia, 6% is Apple. You have about 15% in 2.Stocks. So the total as I was going up daily, but if you're a portfolio manager investing in industrials, you're getting killed. You can't keep up with because you don't own any Nvidia or Apple. So you have a small number of stocks that that are weighted very heavily in the S&P, you know, 30% is technology. So you have to be able to keep up with the tech move, and it means there's a lot of underperformance, even though correlations are rock bottom.It's a great environment for stock picking. But if you're not owning technology, you have to really figure out how you're going to keep up if that's your benchmark. So eco-weighted, you know, the benefit is that everyone is, is equal weight across the S&P. So it gives you a much more clearer picture of what is the market doing, so to speak. So when you see the Dow, all of a sudden move to new highs, the e at S&P all of a sudden move to new highs, you know, that's encouraging. We want to see the transports do the same thing for those that are Dow theorists.It'd be great if every little piece of the puzzle was, was moving in the right direction. I think we're, we're getting there. That's a slow process, butUh, you know, I'm encouraged by what's happened in recent weeks.

10:04 spk_0

But when we talk about the equal weight, what we're talking about is giving every stock in the ESP the same weight. So Nvidia is not 8% of the of the of the of the index. So, and that's right. And that's actually where you can see if if if traders or investors, if they're looking, you should be looking at what's happening in the equal weight because that gives you a better view on kind of what's happening in the broader market, right? Right, so let's talk about momentum indicators that what that signals for stocks.

10:29 spk_1

Look, for those that are unaware, I mean, momentum can be simply defined as, let's say you're tossing a ball up in the air and initially it moves quickly, but then it slows and it starts to drop, and so,You know, stocks do this all the time, year after year. You want to capture stocks as they're starting to move and trending higher when momentum is very strong. When they get to be so-called overbought, it's not necessarily a sell signal, but you want to pay attention because as they get too overbought, like we see now with gold, that has an RSI relative strength index of about 90, then, you know, the upside might not prove to be as, as promising, I think, in the.Months to come. So when they start to fall, you know, momentum goes in and out of favor. So common momentumcas are ones like RSI, Strength index, which has a gauge between 0 to 100. Other ones like MacD moving average convergence divergence, or more trend following. They don't, they don't judge overbought, oversold, but they, they help you to stay on the right side of the trend. And so I encourage people that don't use technicals.Use a MacD on a weekly basis. When the when the MacD is positive, and particularly on a daily and weekly, you want to stick with that stock. When it starts to roll over, then you utilize risk management techniques or whatever, depending on what your time frame is to to make adjustments. Right,

11:36 spk_0

hold that thought one minute cause we're gonna take a break, we're gonna come right back.So let's now talk about uh breadth and leadership, right? And, and are the markets, in your opinion, or our investors too dependent on what's happening in the mag 7 names?

11:54 spk_1

Well, I think the world is too dependent. I mean, these are companies that are dominating with regards to earnings growth. They're the ones that are making the money. That's right. People think they're overbought, but let's not forget, we haven't seen an AI cycle ever before, so they could easily go to 100 PE right now they're, you know, what, in the low 30s, mid-30s.Who's to say that that being overbought is a reason to sell when we're still in the very early innings of AI, not based on my own thoughts, but based on what every CEO of all these companies continues to say time after time after time on conference calls. Demand is simply overwhelming. So, we've had this over the last 100 years, it's happened a dozen times. You look at the generals back in the 30s, General Motors, General Electric.They all dominated the index indices, right? Exxon, DuPont. This is just 2025. It's not 1935 anymore. It doesn't mean necessarily anything is different. It means you have to understand what represents the S&P and in this case, you know, you have new leadership, that, that's a good thing. Uh, these are all companies that are changing our lives for the better. We shouldn't be upset about, oh, that means it's a bubble. It's more about what are trends, what are, what are, what the company is saying specifically.And use that to frame how you invest in the market. But you

13:05 spk_0

know, you can have short term overbought, which all that means to your point, is manage your risk. Understand that. Don't necessarily go chasing it, give it a chance to digest. Maybe it backs off a little. Nothing says it's going to back off 50%, but you have to be smart about how, you know, how you, how you assess what the market's doing.What these individual names

13:24 spk_1

are doing. Having watched markets for a long, long time, I'll just say that it's rare for overbought conditions to lead to immediate sell-offs as quickly as what investors might think. You hear these phrases all over time in the media, oh, it's overbought, it's over and it might be overbought maybe on an hourly basis or on a daily basis, rarely on a weekly or monthly. When they get truly overbought on a monthly, it's time to pay attention, butYou know, that's not gonna be your be all end all. Time frame is important for any investor. I know your time frame, know your risk tolerance. Don't put all your eggs into one technology stock. Uh, obviously you want to have some diversification. Uh, we're all different. And, and so, uh.You know, utilize that kind of risk management that works for you in your own timeframe.

14:07 spk_0

Right. So talk about this. I don't know if you had a chance to even look at this latest announcement we heard this morning, Open AI and AMD, right? Because now AMD was up 35% or something on the back of that news, right? That open AI is now going to do what with AMD?

14:22 spk_1

I think in general, anytime that a company opens.Their mouth and says they're doing significant with with open AI or any type of AI, you know, it,

14:30 spk_0

it, but no, but to your point, open AI, you know, they get in bed with AMD. They get in bed with Nvidia. They get in bed with, you know, they're in bed with everybody, right? That, that it's kind of a, the thing that's kind of interesting is when you think about it, Nvidia, Jenson Way, he's involved in almost every one of these deals, whether it's through open AI, whether it's to Intel,Right, um, which makes it, which makes it interesting on the one hand, but it, you know, kind of for me raises a little bit of a flag saying, OK, it feels kind of circular to me, right?

14:57 spk_1

We, we'll know that when the time comes. I mean, look, I, I, uh, am not one to say let's leave the party early unless I have the proper size. So I, I, uh.If you want to stand by the punch bowl and near the exit, that's great. I, I'm willing to have a few more glasses of punch and then hang out with all the AI leaders and, and talk, uh, how we're gonna make money. Let's

15:18 spk_0

talk about what you think the next big signal is gonna be from a technical kind of perspective, right? What what are you looking for? What are the signs of, you know, another, look, I was gonna say a potential breakup, but we've clearly broken out.

15:31 spk_1

you have to differentiate between short term and and and intermediate term. I think short term, we want to see evidence when you start to see real breadth divergence, and we've seen bread, you know, it's the percentage of stocks above their 20 day moving average is down about almost half of where it was about 3 months ago. OK, that's interesting. It's not a, we're gonna sell everything. It just means that tech is working, the rest of the market really hasn't. Now that's starting to slowly change. If we don't see the rest of the market go up materially in October to join tech.That would be a little bit of a concern if and when we see sentiments start to get more optimistic. My own cycle, say mid-October to mid November is going to be a choppy period. If we're going to get a correction, and I do think we're going to get some sort of a back and fill, I think that's going to be our window is likely November. So short term, that's what I'm looking at. All right, so

16:17 spk_0

when you say, when you say a slight correction, 5 to 8%, 3 to 5%,

16:22 spk_1

probably 3 to 5%.to know. All I know is if tech is still working really, really well, uh, very difficult to expect too much and, and I want to see tech really start to roll over, that meaning the leaders, the invidias of the world. I don't mean, I don't mean I want to see it because I'm bearish. I mean, if you want to be bearish on the stock market, you need to see evidence of these main leadership stocks within the S&P starting to roll over. We don't see that yet. For the intermediate term.It's more of a longer term, you know, where, where nothing is really working and, and, uh, 9 out of 10 markets will peak because breath really starts to roll over. How many stocks are within 20% of all-time highs. When that starts to shift, the stock market doesn't peak at all-time highs, but many, many stocks peak and start to fall off beforehand. So when you start to watch other indicators like that, it will give you a clear warning signal that something is amiss, and I really want to pay attention.The cyclos that I look at have been bullish since 2022. They show a little bit of a choppy face coming in in 2026. That doesn't mean a bear market. It does mean that after two years of 20% and then potentially this year being up 20%, 202,020, midterm election year typically are a year when when you you have to consolidate. So, uh, I'm, I'm watching, but I'm not really taking much action right now to try to prepare for it. So

17:41 spk_0

the missing jobs report, in your mind, is it, is it?Something to be concerned about, or you're worried about it, you're worried about what the ADP was negative, right? The ADP last week was negative. It was negative 37,000. It was supposed to be plus 50%, give negative, so that was fairly negative. But the jobs what we didn't get anything. But the judge is what was only supposed to also show 50,000 jobs. So are you concerned?

18:03 spk_1

I, I try as a principle never to let economic data keep me up at night. But I, I think that, you know, they're all looking at past data.If there's any area that's ripe for regime change, it is taking humans out of the equation with regards to the Fed and replacing it with AI that could be a non-emotional way of managing the economy. And, and I think that, you know, GDP has been good to your earlier point, unemployment's been low. The labor market definitely has slowed pretty materially, but people are not firing. They're just stopping hiring. A big difference. So you have, it's sort of a bifurcation within the labor market and it makes it.Tougher for the Fed to do its job. You have a number of people now and then that are all jockeying for Powell's spot, and that's puts the Fed clearly in the line of fire because you have a couple that, oh, we definitely should be cutting and oh, it's fine for, I, I, I don't know what any any of us gain in our day to day.You know, routine by sitting and listening to these guys talk about, you know, I, I, I just find that you have to watch what's priced into the market, I think is very important. How many cuts are are in the are are on the table for what's going to happen. So between now and next summer, let's say a year from now, like next October, we have about 4 cuts and we have at least 1 for sure, it's gonna happen the end of this October this month.Another one that likely is going to happen by the end of the year. And I think it probably will because the fact that there's no data now. So we don't know. So the Fed clearly wants to be err on the side, I think, of, of keeping rates easy. Scott Pasan is, is a genius. I think he'll do anything in his power to likely juice the economy, uh, keep things running faster as long as it, you know, I think inflation doesn't get out of control and with everything we've seen, crude oil.Is going to have a short path to $50. How does inflation rear its ugly head if if crude goes down and we have the deflationary part of AI that's making everything less expensive as productivity goes up. So those are two important forces to why we shouldn't really care about inflation, even if it has a minor bump. I don't think it's a big deal, and I think we ought to really focus on the labor market. So I'm very much in favor of, of cutting rates and letting the economy run.You know, so, yeah, that's all I'm gonna say about the economics. I, I, I think that I, I'm not an expert in that field, but I, I certainly, uh, I like to see what the spreads, what the Fed is talking about when you look at like the one year, one year forwards, and they'reYou know, sort of at a higher level right now than the rate cuts have been priced in. So there's a little bit of a divergence there. It means the Fed either eventually has to join what the market's saying, or we got to strip all these rate cuts out and make them come back to even. And so I, I don't know what the right answer is there.

20:41 spk_0

I think if we get, I think if we get 2 more rate cuts, that'll be another 75 bases.Points that we will have cut on top of the 100 that we cut last year. Uh, I think that puts us to a place where, uh, where I think it should be OK, unless of course we see the economy go off the edge. Listen, I really appreciate this time we had to talk. I could talk to you for another 3 hours in here, but we really can't do that. I got to get into the recipe of the day that I want you to be part of this.Look, when I was a kid on on Sundays, it always smelled like simmering soups in the kitchen, right? Uh, my mother believed that the secret to good soup wasn't the vegetables of the stock, that it was the slow patience that turned the humble ingredients into something velvety and rich. So Vellutata di verdure is one of those soups. It's simple. It's just velvety vegetables, right? It's bro.It's a touch of cream, but it feels like a warm hug after a chilly day. Now I remember coming in from raking leaves with cold fingers and red cheeks, and there it was on the stove, bubbling quietly, right? The steam fogging up the kitchen windows. Now, when I make it, I take the same unhurried approach. I sweat the shallots, letting the squash soften just enough, and then folding in the cream, so the whole thing comes together.Nice and silky and smooth. I like to serve it with toasted baguette rounds just as my mother did, and always with grated cheese on the side. A bowl of ottata isn't just a meal. It's a way to slow down and remind yourself that good food doesn't have to be complicated. It just needs care. Now, you can scan the QR code on the screen for the full recipe and you can thank me later.That's a wrap for today's Trader Talk, but the conversation continues. Subscribe on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcast. You got questions or topics you want covered? Email us at tradedertalk@yahoo Inc.com because we're always listening. Until next time, stay sharp, stay disciplined, and stay in touch. Take good care.

22:42 spk_2

This content was not intended to be financial advice and should not be used as a substitute for professional financial services.

Kommentare anzeigen