Thanks For Capitulating
Investors,
The sacrificial lamb has been given to satisfy the market gods.
Leopold Aschenbrenner’s fund, Situational Awareness, has blown up.
Periods of speculation require a hard reset, crowning a poster-child of capitulation.
And we officially have that now, thanks to Leopold.
This doesn’t mean that I’m attracted to the risk/reward on the high-flying memory, chip, & equipment stocks that have dominated headlines over the past 6-12 months.
But Leopold’s official collapse likely marks a key inflection point, representing a shift back to outright bullish conditions for the market-cap-weighted indices.
The fact is that the S&P 500 is trading at the same price as it was on May 14, 2026.
This time-based consolidation has allowed the market to digest the historic gains off the March 30th lows, during which time the index gained +20.6% in 44 trading days.
Investor sentiment has been in suppressed territory for quite some time now…
The longer this choppy action has remained, the louder the bearish narratives became.
Bears beat their chest to the drum of heightened uncertainty around a new Fed Chair, continued geopolitical risks, labor market conditions, inflation, earnings, etc.
And yet, here we are…
Up +18.2% YoY and +9.4% YTD.
This is a raging bull market, by all accounts.
If you don’t believe me, ask financials (XLF), healthcare (XLV) value (VTV), high-dividend (VYM), dividend growth (DGRO), high cash flow (COWZ), equal-weight S&P 500 (RSP), small-cap discretionary (PSCD), broker-dealers (IAI), insurance (IAK), biotech (XBI).
Rotation is the lifeblood of a bull market, and the evidence of breadth expansion in recent months and weeks is crystal clear.
But that rotation has come at the expense of high-beta themes, including tech, growth, and mega-caps, particularly in an environment where the market has priced in significantly higher probabilities for rate hikes in 2026/27.
Logically, we must ask ourselves…
If that period of consolidation is coming to an end and if the market has fully priced in rate 2 rate hikes in 2026 (which it has… just ask the 6M Treasury yield), which stocks are poised to capitalize on that re-strengthening & decisively bullish behavior?
Personally, I think the market has been giving us a clue for the past 1-2 weeks…