'Late Stage Bull Market'; Trader Reveals Next Asset To Fall 40% | Gareth Soloway
TL;DR
Gareth Soloway warns the S&P's record highs mask a late-stage bull market deteriorating beneath the surface, with software stocks already down 20% and technical resistance suggesting a major top could form within weeks; he is short both the S&P and Bitcoin while positioning for long-term gold upside.
🚨 Late-Stage Bull Market Warning 3 insights
Breadth deterioration signals 2000-style topping pattern
While the NASDAQ pierces 25,000, subsectors like software (IGV ETF) are already down 20% year-to-date, mirroring the dot-com era where lagards collapsed before the index rolled over.
Critical technical level must hold for one week
The S&P is testing the upper bound of a parallel channel dating to COVID lows; Soloway warns a close back below this resistance within a week would confirm a fake-out and signal a major top.
NASDAQ parabolic move mirrors 2000 peak
The index has rocketed 22% in just one month to slam into parallel channel resistance, similar to how the NASDAQ pierced 5,000 by only 150 points in 2000 before crashing.
🤖 The AI Spending Economic Engine 2 insights
$700 billion annual capex acts as massive stimulus
Big tech's AI infrastructure spending is the primary economic driver currently, filtering through the economy like pandemic stimulus and postponing recession risks until at least 2027.
K-shaped economy relies on wealthy spenders
The top 30% of asset-owning Americans are sustaining spending and investment, while the bottom 70% feel recessionary pressure; a pullback by the high-end consumer would collapse demand.
🏦 Fed Policy & Inflation Reality 2 insights
Four hawkish dissents signal rate-cut resistance
The most dissents since 1992 came from governors opposed to even hinting at easing, signaling the Fed will push back against political pressure to cut rates prematurely.
Government spending creates sticky 3-4% inflation
Soloway expects long-term inflation to settle between 3-4% due to $1 trillion in quarterly deficit spending, regardless of temporary oil price spikes that should eventually fade to $60-70/barrel.
🎯 Tactical Asset Positioning 2 insights
Short S&P and Bitcoin at resistance
Soloway is short the S&P 500 and Bitcoin at current highs, having already sold most long positions from the March bounce, viewing the current rally as low-probability exhaustion.
Long natural gas and multi-year gold
Natural gas is one of the few assets where he is deploying new capital, while he maintains a strongly bullish five-year outlook on gold expecting prices to move 'much, much higher.'
Bottom Line
Treat this as a late-stage bull market requiring extreme caution: the economy is propped up by unsustainable AI spending, technical resistance is flashing warning signs, and the prudent move is shorting indices at highs while accumulating gold for the long term.
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