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Good morning:
Goldman is calling for the S&P 500 to hit 7,600.
But the target isn't the point. The warning inside the note is what matters.
Valuations are stretched. The S&P 500 trades at 22x forward earnings. Same altitude we hit in 2021. One notch below the 2000 dot-com peak. At these levels, if earnings disappoint, the market doesn't "dip." It drops a manhole cover on your foot.
The index is dangerously top-heavy.
Ten companies now make up 41% of the entire S&P and produce 32% of its earnings. Last year, those ten names delivered over half of the index's return.
Goldman's point is simple. If anything cracks in these leaders, the whole structure shakes.
Here's the part mainstream TV won't tell you.
This isn't happening because "AI," "productivity," or "earnings growth" suddenly became magic words.
It's happening because liquidity has stayed strong for three straight years.
The Treasury and Fed have held the repo system together.
Japan is printing. China is printing.
That's the fuel.
So yes, valuations are stretched. Yes, concentration is extreme. But the only thing that decides when it breaks is liquidity. Not buzzwords.
If you need the signal that everything is turning, watch one chart. FNGD.
If FNGD breaks above its 50-day EMA, that means forced selling in mega-cap tech, leverage unwinding, repo stress spilling into equities, and the concentration trade starting to crack.
That's the real market trigger. Not whether "AI disappoints," as someone on CNBC said this morning.
We'll break all of this down today.
Today's Top Stories
Venezuela Oil Deal Pressures Crude.
Trump's announcement that Venezuela will send 30-50M barrels to the U.S. knocked crude lower. Energy trading is messy today.
Tickers: USO, XOM, CVX, COP
NVIDIA Says China Still Wants Chips.
NVDA reports strong Chinese demand for its AI hardware. Semis get a lift.
Tickers: NVDA, AMD, SMH
Futures Mixed Ahead of Heavy Data Day.
ADP, JOLTS, and ISM Services all hit between now and noon. Expect volatility.
Tickers: SPY, QQQ, IWM
Gold Finally Cools Off After a Surge.
Gold ran into resistance near $4,500/oz and backed off after a 4% rally. Tickers: GLD, SLV
We'll walk through all of this and the FNGD trigger live.
Join us at 8:45 a.m. ET for Market Masters.
Stay positive,
Garrett Baldwin