To The Moon

$ARK Innovation ETF(ARKK)$ $Invesco QQQ(QQQ)$ $S&P 500(.SPX)$ 🔥📈🚀 $SPX Valuations, Bull Market Compression & the Marks of Caution 🚀📈🔥

I’m raising my conviction right here, not because I’m blindly bullish, but because the data demands nuance. This is not irrational exuberance, but it is stretched. Markets are resilient, not euphoric; elevated, not unhinged. And that’s exactly where opportunities live for traders who know how to straddle momentum and macro risk.

📊 4th Strongest Post-Correction Rally in 70 Years

Since the April 8 low, the $SPX has surged +33%, beating the post-correction historical average of +27%. According to Fidelity’s latest Cyclical Bull Market chart, we’re tracking ahead of both median duration and magnitude, sitting firmly in the upper quartile of historical recoveries alongside 1982, 1995, and 2009.

🧠 Howard Marks: Valuations High, Euphoria Missing

Howard Marks doesn’t see full-blown bubble behavior. He acknowledges the forward P/E of ~23 is well above historical norms, yet argues it’s not driven by a mania. There’s no speculative insanity; this isn’t 1999 or the “Nifty Fifty” trading at 60 to 90x earnings. Still, he recommends a Level 5 defense: reduce exposure to aggressive positions and rotate into quality, cash-flow-rich defensives.

🧩 It’s Not the Magnificent 7 Driving the Bubble Math

Marks makes a critical distinction: the Magnificent 7, with a ~33 P/E, are expensive, but justified. They have unmatched market share, product superiority, and economic moats. It’s the 493 other names, averaging a P/E of 22, that skew the broader S&P valuation. That’s where the risk lives. Underwhelming growth with overstretched multiples is a late-cycle red flag.

📉 Behavioural Indicators Say: Proceed With Precision

🧮 Buffett Indicator (total US equity market cap to GDP) is near historic extremes

📊 S&P 500 market cap-to-sales sits at a record 3.3x

⚠️ Barclays’ Equity Frenzy Index has doubled, entering bubble territory

📉 Dividend yield vs 10Y Treasury shows equities are richly priced relative to risk-free income

🔬Even in vehicles like $ARKK, where high beta, thematic names are concentrated, valuation sensitivity is re-emerging. It’s no longer a pure momentum game; dispersion is rising, and capital is rewarding fundamentals again.

🌀 Compression Without Capitulation

Technicals confirm a volatility contraction regime across the 1-min, 4H, and daily charts.

🔵 1-min: rising channel still holding above EMAs

🟠 4H: respecting Keltner mid-band and EMA 21

🟣 Daily: candles pressing top Bollinger layer, MACD still climbing, RSI above 60

🎢 October Isn’t the Crash Month, It’s the Swing Month

October has a reputation for pain, but it’s volatility, not doom. Swings are 11 to 21% wider than average months. The threat isn’t a collapse; it’s false moves, whipsaws, and liquidity flushes that punish leverage and reward discipline.

🛡️ My Portfolio: Built for Velocity and Shock Absorption

I’m 45% in quality growth and breakout setups, 35% in defensives (short-term bonds, dividend payers, low-vol staples), and 20% in opportunistic trades. I’m not chasing high-beta names without structure, but I’m also not hiding in cash. This is a tactical battlefield, not a passive ETF market.

📚 Historical Context

When the S&P 500 has gained more than 30% in 120 days post-correction, the 3-month forward return has averaged +9.6%. We may be overbought, but history doesn’t fade until it breaks.

👉❓Are you managing for volatility or momentum? Is your edge built for these subtle October pullbacks, or are you overexposed to broad valuation drift?

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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