The market hit new highs today.
Your portfolio probably looks great.
Your money manager is patting himself on the back.
Now fire him.
Look, we're not trading the S&P 500 anymore. We're trading the S&P 10.
Money managers have thrown out the entire playbook.
No research...No fundamentals…No rotations…Nothing.
They're just buying mega-cap trillion-dollar companies and praying. That's the game plan.
I've been doing this for 40 years. I've seen this movie before. When you're top-heavy like this, the ending isn't pretty.
The Weekly Chart Destroys the Daily Chart
Let’s start with the obvious.
Most of you are staring at daily charts all day. That's your first mistake.
The weekly chart is what matters. It gets those long-duration trend trades that actually make money.
The weekly S&P 500 chart tells me we're banging our heads against the ceiling.
Why? The rate of change is getting heavier and heavier. The histogram bars are getting weaker.
This is going to break at some point. I don't know what's going to break it. All I know is when it breaks, it's going to be fast and furious.
If you're wrong on this trade, it's pretty much the end of your career.
The Hedge Fund Community Just Gave You a Warning
Right now, hedge funds are at their highest short positioning since 2022. That was three and a half years ago.
Let me be clear: this isn't bearish or bullish by itself.
But here's what it means. When this market does go down, if the hedges are still leaning short, they have no intentions of buying.
You need hedge funds on the other side to act as shock absorbers. Without them, the market bleeds itself to death.
What you're seeing instead are asset managers running buy programs on tech and nothing else. Because that's the only thing going up. A little bit of Walmart. That's it.
The Buy Now, Pay Later Scam is Winding Down
For the past two to three years, retail has been great. Costco, Walmart, TJ Maxx - all at highs. There's been a boom in buy now, pay later.
However, when you buy now, that doesn't mean you pay later without interest.
They're going to charge you. These companies are front-loading revenue and earnings, but if they don't collect later, it's all a fraud.
Bloomberg just showed that this trend has peaked and is winding down fast.
You're already seeing stocks starting to implode. Abercrombie's pulling back. Target's pulling back. Even Costco is working its way lower.
This tells me the economy isn't on the way up. It's on the way down. That's why the Fed's going to have to cut rates.
The Fed Rate Cut Question Mark
The odds of a Fed cut in September are 88%. I'm not betting against it.
If they do 25 basis points, that could sustain the market…but…If they do 50 basis points, that's the end of this bull run.
A 50 basis point cut is a panic move. The Fed would be telling you they're not just behind the curve, but things are a lot worse than they're letting on.
The psychological message is: what does the Fed know that we don't know?
What This Means for Your Portfolio
The market is telling you it doesn't care about the economy.
There's no rotation to defensive stocks. They're hammering utilities. They're hammering pharma. No rotation to cash flow or dividends.
Money managers are reaching for alpha at the end of the quarter.
They're avoiding conservative stocks and chasing high-beta tech to pad their numbers. That might be because they're seeing an end to the bull market and trying to grasp at the last bullish straws.
Without rotations, the market gets top-heavier. Eventually, it implodes.
Here's What You Need to Know
We might push higher to 6,700. The weekly setup suggests we need to go through that 70 RSI to get there. But the risk-reward is terrible. Watch for the lip curl in the MACD. That's your signal.
This is what unhealthy markets look like: risk concentration and no rotations. No diversification. We're at the tail end of this bull market. It might end in December or January.
Tomorrow I'm covering fundamentals and asset utilization. The concepts that separate profitable traders from the ones who blow up their accounts when this top-heavy market finally breaks.
The Genesis Cog system saw this coming. We've been positioning for it. The question is: will you be ready when it happens?
Learn more about the Genesis COG system HERE.
Professor Jeffrey Bierman
Creator of the Genesis COG System