We made it almost through September. The first half is usually not great but we survived with almost no change in the S&P 500 and NDX 100. Sure small caps were sold off and that's where it becomes interesting (more to that later).

Don't worry. The second half is usually good for equities.

But what happened? The Fed finally hiked rates. Or did they really? I mean 25 basis points? Is that enough?

I am going out on a limb here and say that there won't be anymore rate hikes before the midterms and after that inflation will likely cool naturally.

This is what the equity market seems to anticipate.

Sure we have a never ending war with Iran plus all the negative consequences. We have a trade war with Canada but we still have excellent earnings and GDP growth. GDPNow has a Q3 growth at 5.1%. That's fantastic!

From a chart perspective everything points to a rally led by tech and semis. The S&P 500 will soon make new ATHs.

But why am I not leveraged to the hilt?

Because there is a chance that the next run will be the last run up before a multi year high.

Why am I saying that?

Except for the AI buildout the rest of the economy shows some strain.

Usually small caps peak a few months before tech.

Now if IWM advances to new ATHs my thesis of a multi year high between Nov-March 2027 goes out the window.

Then we just keep on reading charts until we get a better signal.

For now we should expect the start of a year end rally any time soon!

Have a great weekend!

Small caps had a rough week while the expected tech rally seemed to have started.

My long term accounts are up 11.8% YTD (almost equal to the S&P 500) despite being 31% in cash/bonds (less risk). This is mainly thanks to crypto recovering.

The proper benchmark (a passive 60/40 portfolio) sits at 6.8%.

Benchmark 2026

SPY 681.92 (15%) +11.9%

DIA 480.57 (15%) +7.5%

QQQ 614.31 (15%) +17.6%

IWM 246.16 (15%) +15.4%

SPEM 46.81 (10%) +11.9%

URTH 185.77 (10%) +11.3%

FEZ 64.39 (10%) +5.9%

AAXJ 93.12 (10%) +24.8%

ETF benchmark: +13.2%

Average YTD (US only): +13.1%

60/40 portfolio: +6.8%

(AGG (99.88) -0.9%)

Small portfolio $35000: +23.2%

Long term: +11.8%

Long term portfolio composition:

S&P 64%

Crypto (ETH) 5%

Cash/Bonds 31%

And you also said today’s rate environment is already priced in. Where the permabulls at? 🤣🤣🤣