The Stock Market Is NOT Ignoring The Bond Bear Market

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It’s been all too common to read that “stocks ignored the bearish move in bonds.”

While that's been true at times, the bigger picture doesn’t support it, and ignoring it could be costly.

The cost could come from both being in the wrong trade or missing the opportunity to enter new trades early as they are developing.

This week we’ll look at the effect bonds have had on stocks and an investment theme that's looking promising after being pulled down by the bear market – in stocks.

This week’s Outlook is another example of the quote shared a few weeks ago,

“It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so.” 
- Mark Twain

 

There’s Nothing Stealth About This Bear Market

The S&P 500 is up about 13% for the year, and about only 32% of the 500 stocks are outperforming the index

The Equal Weighted S&P 500 ETF (RSP) is up about 9.5%, and about 38% of stocks in the index are outperforming it.

On the bearish side of the index, however:

• 50% of the S&P 500 is down for the year
• 29% of the S&P 500 is down more than 10% year-to-date

While the year-to-date numbers are discouraging, the bear market worth focusing on isn’t measured year-to-date.

The trend to focus on is the increasing pressure that higher interest rates are having on the broad market.

In the chart below, you can see that TLT has had a stair-step decline in price, which represents the increase in rates. At the same time, the SPY index has managed to work its way higher when the TLT rallies or goes sideways, but the percentage of stocks staying above their 50-day (blue) and 200-day moving averages (green) has been accelerating lower.

It’s clear that the last push lower in TLT (move higher in rates) has had an increasingly bearish impact on S&P 500 stocks trying to stay above key moving averages, which means they are going down.

The Indexes Are Near All-Time Highs. Will The Broad Market Follow?

 

 

**The commentary will be completed later tonight.

 

Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral.  The video analysis dives deeper.

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Summary: Markets remain broadly risk-on, led by new highs in the Nasdaq and semiconductors, low volatility, strong risk gauges, and slightly improving breadth and internals. However, weak sector participation, deteriorating longer-term breadth, and a sharp rise in rates remain significant concerns beneath the strength in growth and technology. 

Risk On

• Major U.S. indexes were mixed with the exception of QQQ pushing to new highs this week. (+)
• Volatility is under its key moving averages and around its lowest levels for the year. (+)
• Growth remains in a bull phase led by semiconductors and hit a new high on Friday. (+)
• Foreign equities, led by emerging markets, still look relatively strong. EEM is roughly matching the S&P performance. Though more established foreign equities have dipped into a warning phase, testing their 200-Day Moving Average, and got a small bounce on Friday. (+)
• Risk gauges remain strongly risk-on. (+)
• Seasonal trends tend to strengthen into October. Gold tends to have a positive seasonal trend during this period as well. (+)

Neutral

• Market internals bounced off their lower levels to closer to a neutral reading. (=)
• Volume patterns were mixed, with no accumulation days in the S&P while QQQ was the strongest with 3 accumulation days and only one distribution day. (=) 
• Semiconductors continue to lead along with related foreign countries. (=)
• The modern family is mixed, with Semiconductors the strongest overall and many members showing some improvement towards the end of the week.(=)
• Soft commodities pulled back off their highs, dipping below its 50-Day Moving Average. Copper is consolidating and compressing at high levels. (=)
• Gold is starting to look heavy. Oil is maintaining a bullish stance, but could break below its 50-Day Moving Average. (=)
• The dollar is at its highest levels since April, 2025 and may be contributing to metal weakness. (=)
• The percentage of stocks above key moving averages saw a jump off the lows, signalling a potential bottom. (=)

Risk Off

• Sectors skewed negative again this week, with notable exceptions in technology, energy and transportation. (-)
• New high new low ratio continues to be weak, sitting around its lowest levels for the year. (-)
• Rates hit new 20-year highs with a sharp move lower in bonds this week. Speed of move continues to be concerning. (-)
• The color charts (moving average of stocks above key moving averages) are showing weakness across the board with even the 200-Day relationships weakening. The Nasdaq is showing some early signs of improvement. Two out of the three are clearly risk-off. (-)

 

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Actionable Trading Plan

Maintain a risk-on bias but stay selective, favoring technology, semiconductors, and other areas demonstrating clear relative strength while allowing winning positions to run. With participation still uneven and rates moving sharply higher, avoid aggressively expanding exposure until broader sectors and longer-term breadth improve; keep some cash available and use weakness in leading areas for measured entries rather than chasing new highs.

Continue to monitor QQQ and semiconductor leadership, market breadth, and the bond/rate move for confirmation or deterioration. Add exposure if improving internals broaden into more sectors, but reduce risk if technology leadership breaks, breadth rolls back over, or rising rates begin to pressure the major indexes more broadly.

 

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Keith's Weekly Market Analysis Video

**This is today’s video. Please note that the date shown on the title slide is incorrect.**