Why Markets Don’t Seem to Care

Managing Editor’s Note: A regime change is a radical shift in the market. Three things happen: The top stocks are overthrown. A new investment theme emerges. And a new group of stocks begins the ascent to the top…

If you’re caught unprepared, you’re left with falling stocks. But if you’re ready, it’s possible to catch the new stocks right as they break out by double, triple, and even quadruple digits.

That’s where Jason Bodner comes in.

He was a senior executive and partner on Wall Street during previous regime changes. He saw up close which types of stocks soar. In fact, he helped cause some of the biggest moves.

Now he’s reverse-engineered a way for you to have a shot at getting ahead of these big moves. In the past, you could have seen gains as high as 86%, 213%, 367%, and even 911% – in a matter of weeks and months. All told, you could have turned a few thousand dollars into a six-figure nest egg… potentially in less than a year.

Now Jason says we’re set to see the fourth regime change soon, and it could be twice as big. That’s why he’s revealing all the details tomorrow at 8 p.m. ET. If you haven’t RSVP’d yet, sign up automatically right here.

Markets continued to push higher last week. Both the Nasdaq and S&P 500 hit all-time highs.

On the surface, the rally seems unstoppable. Even the slightest pullback sees traders piling back in. The big sell-off in March was just another blip in a bull market well into its fourth year.

However, if you take a step back, it’s hard not to notice a huge disconnect…

For a start, oil recently burst back through the $100 level as tensions heat up again in the Middle East. That has major ramifications for inflation. Bond yields are also surging, and 10-year Treasury yields are at their highest level since February 2025.

A rate cut was on the table just a month or two ago, but markets are now factoring in potential rate hikes before the end of the year.

But here’s the thing…

At any other time, these factors would have sent stocks much lower. But the market just doesn’t seem to care.

That’s why we have to navigate these circumstances very carefully…

No Desire to Sell

One of the reasons behind the growing complacency has been the market’s meteoric rise from its March 30 low. Last Thursday’s intraday high represented a 19% rise in the S&P and a near 30% rise in the Nasdaq.

There’s barely been a down day during that time, and folks who bought in at any stage are sitting on gains. All they can think about is the market moving even higher. That’s why they have no desire to sell.

But much of the rally has been driven by AI-themed stocks. And within that space, just a handful of stocks (including Nvidia, Micron Technology, and Alphabet) have done most of the heavy lifting.

The rally is more limited than many realize. Plus, the CBOE Volatility Index (VIX) has been tracking just above its yearly lows.

That suggests that the stock market is blind to any trouble ahead. Something just doesn’t stack up given the challenges the market is facing…

Growth Versus Reality

A catalyst behind the rally was the positive earnings season…

The massive AI infrastructure build-out totals in the hundreds of billions this year alone. Many assume all that spending will translate into massive profits.

But therein lies the fatal flaw in the rally. Buyers jumping on the momentum trade are essentially betting that all that AI spending and the expected productivity gains far outweigh the negative factors sweeping through the economy.

But surging inflation could lead to higher interest rates and slowing growth. Many consumers are facing a cost-of-living crisis. And, of course, there’s still the war in the Middle East.

Hostilities have been ramping up again this past week, with neighboring countries like the United Arab Emirates getting pulled further into the fray. With no workable peace plan, oil has been surging. It’s hard to see an exit ramp…

In short, those buying on the back of momentum believe that the AI-narrative is enough to outweigh and overcome these issues. I’m more skeptical.

It only takes a slight shift in sentiment for the bottom to fall out. That’s when volatility can explode, causing unwary investors to suffer significant and painful losses.

So if you’ve been trusting this rally to continue indefinitely, you may want to reassess. As traders, it’s more important than ever that we focus on risk management while only taking on the best potential setups for trades…

Happy Trading,

Larry Benedict
Editor, Trading With Larry Benedict