To The Moon

The S&P 500’s decisive leap above its 200-day moving average has reignited bullish sentiment, with the Nasdaq 100 clawing its way back into technical bull market territory. Just weeks after 'Liberation Day' sent markets into a tailspin, investors are now wondering whether to chase the rebound or use the lift to cash out. For me, the answer lies not in hysteria or hesitation, but in hard-nosed selectivity.

It’s tempting to view the market’s swift recovery as confirmation of renewed strength. Yet beneath the surface, the internals tell a more fragile story. The rally has been powered by a narrowing group of outperformers, especially in tech and AI-centric names. Leadership breadth remains anaemic, suggesting the surge may not be as broad-based as the indices imply. When only a few horses are pulling the cart, it rarely ends in a sustained gallop.

The technical bounce was certainly helped along by institutional capital rotating back into perceived winners. But enthusiasm doesn’t erase valuation gravity. The S&P 500’s forward P/E ratio still hovers well above its historical norm, pricing in a near-flawless earnings runway. That runway, I’d argue, remains full of potential potholes—geopolitical risks, inflation reacceleration, and political theatre chief among them.

All in or owl out? The market’s split psyche

It’s Not a Game of All or Nothing

The idea of going 'all in' here feels reckless. Equally, pulling the plug entirely risks missing the remaining upside if momentum continues to stretch. I’m taking a middle-ground approach—trimming exposure to names that have sharply rebounded and recycling that capital into laggards with strong fundamentals and reasonable multiples.

One underappreciated opportunity lies in high-quality industrials and select healthcare firms, where earnings revisions have been stable and balance sheets remain clean. These stocks haven’t run as hard as the semis or software giants, yet they offer durability if volatility picks up again—as I suspect it will.

Tech continues to dominate market psyche, and there’s no denying the sector’s structural tailwinds. But valuations in AI-forward names are frothy. Take $NVIDIA(NVDA)$ and its ilk—brilliant businesses, no doubt, but investor expectations have become unforgiving. One stumble in guidance, and the comedown could be brutal. The smarter play now might be in the 'AI picks and shovels'—less glamorous hardware or infrastructure firms that quietly power the digital shift.

U.S. or China? It’s Not a Coin Toss

On the global front, investors are rightly questioning where better value lies. Chinese equities are undeniably cheap—on some metrics, they’re trading near crisis-level multiples. But price alone doesn’t constitute a margin of safety. Policy overhangs, weak property demand, and strained consumer sentiment have capped upside.

That said, there’s an insight many overlook: China’s central bank has far more room to stimulate than the Fed, which remains in inflation-fighting mode. That asymmetric policy capacity could favour Chinese assets later this year—especially in consumer-facing names or state-aligned infrastructure plays. I’m not rotating wholesale, but I am building modest exposure through select ETFs and ADRs. For now, the U.S. remains the steadier ship—but I’m preparing a lifeboat in Asia, just in case.

Two worlds, one rally—each playing by different rules

Expect Short-Term Gains, Long-Term Whiplash

The technical bull is likely to run a bit longer. Liquidity remains ample, economic data has been more resilient than feared, and corporate earnings—while patchy—have not collapsed. But I expect more chop ahead, especially as Trump’s policy vision becomes clearer. Talk of renewed tariffs or fiscal expansion could jolt both bonds and equities into reassessment mode. Any major shift in trade or budgetary policy would ripple through markets with force.

Here’s a lesser-known risk: despite all the optimism, market liquidity is unusually fragile. Order book depth remains shallow in several large-cap names, meaning sharp moves can become exaggerated. This isn’t 2021’s endless bid wall—it’s a more fragile, twitchier environment. Active managers may be better suited than index trackers to navigate what’s shaping up to be a bifurcated second half.

What Could Surprise to the Upside?

One contrarian angle I’m watching: U.S. small caps. Overlooked, underloved, and cheap relative to their large-cap peers, they could benefit handsomely if a soft landing sticks. Especially if rate cuts materialise later in the year. Don’t be shocked if Russell 2000 names stage a stealth rally.

Small caps stirring? Quiet hands may lift heavy weights

In sum, we are clearly in a momentum-driven rebound, but I’m not buying the breakout blindly. Valuations, leadership breadth, and policy ambiguity demand respect. There’s upside ahead, yes—but only for those with the agility to pick their spots, dodge the hype, and embrace nuance.

Now’s not the time to go all in. Nor is it time to sit out. It’s time to think critically, move tactically, and prepare for a market that rewards discernment more than ever.

@TigerStars @Daily_Discussion @Tiger_comments @Tiger_SG @Tiger_Earnings @TigerClub@ @TigerWire