Narrow Leadership
July 31, 2025
The high-beta trade appeared exhausted on Monday after factor-specific sentiment reached meme stock (GME) highs from 2021. The following day, we noted rotation out of high-beta factors into quality baskets. Yesterday’s Powell press conference and overnight results from META/MSFT will only add pressure to the trend, increasing concentration risk and potentially reinstating the US exceptionalism trade (USD strength).
We’re in a bull market, which means the primary trend is higher until there are signs of a bearish reversal pattern. Notwithstanding a bearish reversal, our near-term technical price objective for the SPX is in the 6605-6670 zone. However, the potential for narrow leadership as described above would make the bull market more susceptible to a pullback as we enter a seasonally weak September-early October window.
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