Price Dislocation in a Momentum-Driven Market

With S&P earnings expectations falling, the rally raises more questions than answers.

Jul 06, 2025

Market in Melt-Up Mode

It was a short trading week, and not much has changed since our last update—except the market keeps melting up. The S&P 500 climbed another 1.72%, continuing its relentless pace higher. Gains of 0.5% per day are becoming the new normal, surprising even the most bullish investors.

From a technical standpoint, there’s growing consensus that the index could stretch toward 6,500 before we see any meaningful pullback. The rally seems to be feeding on itself—momentum drives inflows, which fuel more momentum.

We believe many of the forward-looking fundamental narratives trying to justify the move are either backward-fitted or outright flawed. But as long as the trend holds, risk gets ignored and risk appetite expands—until it doesn’t. To borrow from George Soros:

“When I see a bubble forming, I rush in to buy, adding fuel to the fire.”

That mindset seems to be alive and well.

Earnings Down, Prices Up

Despite a 3.6% decline in S&P 500 EPS estimates for CY 2025 during the first half of the year, the index rose 5.5%. That’s a troubling signal for fundamental investors—but for today’s market, it’s par for the course.

Analysts continue to play the same game: walk down estimates ahead of earnings season so that companies can “beat” expectations. And for now, investors are happy to reward that.

SPX Quarterly OpEx and JPM’s Collar

The S&P is already more than halfway toward JPMorgan’s well-known short call level of 6,505—just 3 days into the new 90days quarter. The speed of this move suggests the market is increasingly confident we’ll blow through that level soon.

S&P 500 Insider Activities

Growth Quality Dashboard (Rule of 40)

Earnings This Week

For the week of July 07, 2025, notable earnings releases for companies with a market cap above $2 billion include:

2025-07-09: PM TBBB 0.00%↑ AZZ 0.00%↑

2025-07-10: AM DAL 0.00%↑ CAG 0.00%↑ VIST 0.00%↑ SMPL 0.00%↑

2025-07-10: PM LEVI 0.00%↑ PSMT 0.00%↑ WDFC 0.00%↑

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