Why the Market Is at Record Highs

July 28, 2025

Mish's Daily

By Mish Schneider

Both SPY and QQQ continue to drive this market higher.

Note how far above the price is from their respective July 6-month calendar range highs (horizontal green line).

Also note the momentum as indicated by Real Motion.

SPY has a mean reversion to the sell side. Plus, with today’s new ATH, momentum did not make a new ATH.

QQQ shows waning momentum and marginal leadership over SPY.

So, what’s going on?

Key Drivers of Record Highs

Trade Clarity
- Recent U.S.–EU and Japan deals eased trade tensions.
- Postponed tariff deadlines reduced uncertainty.

AI Boom & Tech Earnings
- Nvidia hit $4T market cap; strong tech earnings from AI leaders continue to fuel the rally.
- Semiconductor and cloud sectors lead S&P 500 and Nasdaq strength.

Economic Resilience
1. Despite tariffs (~16%), GDP growth (~1%) and low unemployment (~4.3%) signal no recession yet.

Earnings Recovery
- End of a “rolling earnings recession”; profit margins improving across sectors.
- Analysts now forecast S&P 500 could hit 7,200 in 12 months.

Geopolitical Relief
- Israel-Iran cease-fire lowered oil risk; global markets calm.

Retail Momentum
- Return of meme-stock activity (Kohl’s, GoPro, etc.) supports broader bullish sentiment.

But not everything is at new all-time highs.

In the economic modern family, only semiconductors SMH made a new all-time high even with Nasdaq and S&P 500’s stellar performance.

And even SMH has yet to convincingly clear the July 6-month calendar range. (ellipse).

Retail XRT dances on the calendar range high but has not cleared convincingly yet.

Moreover, the all-time high in XRT was made in 2021-now ancient history.

Market Outlook

Bottom Line

The market’s rise is fueled by:

AI-driven tech strength
Trade stabilization
Solid economic data
Renewed retail enthusiasm

But risks remain.

Could just be the summer doldrums. We have seen major selloffs in August.

We continue to watch the modern Family and how they behave as we end July.

Educational purposes only, not official trading advice.

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