The S&P 500 sits roughly 2% from all-time highs while most of its members quietly bleed. This is a reading of the Kobeissi Letter’s “Bull-Bear Market” - what the index is hiding, why it holds, and a set of hypothetical ways to think about it.
Despite a wall of headwinds - the Iran war at day 229, oil above $100, a Fed back in hiking mode, and inflation near 4% - the S&P 500 is only about 2% off its record. The index looks calm because it isn’t really the market anymore. A handful of mega-cap tech names, carried by hyper-concentrated earnings, are masking a broad decline underneath.
The headline and the breadth tell opposite stories. The rest of this note is about that gap - where it comes from, and what clears it.
Equities are grinding near records while the macro backdrop keeps tightening. Three forces define the paradox: sticky inflation, a Fed that reversed course, and an energy shock.
Under a 2% drawdown at the index level, the distribution of individual stocks looks like a bear market. Most names are deep in their own holes.
Since the March 30 bottom, just 10 stocks account for about 70% of the index’s gains. The other 490 split the remaining 30%.
The counterintuitive part: this concentration is backed by real earnings, and the leaders are no longer expensive in the way they were.
S&P Information Technology now trades roughly in line with the broader index rather than at a premium. The mega-caps have grown into their valuations - the story shifted from stretched multiples to compounding earnings.
The bearish breadth is largely a function of the macro overhang. Remove the overhang and the same breadth becomes fuel.
Geopolitical & energy crisis clears
Oil drops, the Fed pauses or cuts
Multiple expansion + broadening rally
The 490 laggards re-rate alongside the leaders, and the index clears
S&P 9,000+Three hypothetical lenses drawn from the note. These are ways to frame the setup for discussion - scenarios, not recommendations.
One end: high-cash-flow AI mega-caps on reasonable forward multiples with secular earnings growth. Other end: selective, deeply oversold cyclicals and rate-sensitive names - Real Estate, Materials - held as recovery call options rather than core convictions.
The largest hypothetical upside is a de-escalation surprise. Monitoring energy and geopolitical headlines matters because that is the switch that could flip breadth into a fast, broad multiple expansion.
If a few mega-caps miss, the whole index is exposed - that is the flip side of 10 stocks driving 70% of gains. The hypothetical counterweight is hedging against prolonged energy inflation and higher-for-longer yields.
This page is informational and educational only. Every strategy, figure, and scenario here is hypothetical and presented for discussion - none of it is financial advice, a recommendation, or an offer to buy or sell any security. Numbers summarize the referenced article and may be rounded or time-sensitive. Markets carry risk, including loss of principal. Do your own research and consult a licensed professional before making any decision.