Oct 8, 2026 · 47 min
Katie Stockton sees a bull market beneath weakening breadth
Katie Stockton Still Sees a Bull Market. So Why Is Her ETF Only 50% in Stocks?
The episode examines whether narrow technology leadership and weakening breadth signal a normal rotation or an approaching market reversal.
- 1Stockton sees the S&P 500’s long-term uptrend intact despite overbought conditions and weakening advance-decline breadth.
- 2Small-cap underperformance and concentrated mega-cap leadership explain why diversified portfolios can lag the S&P 500.
- 3Credit spreads, the VIX, and semiconductor momentum form Stockton’s key year-end warning system.
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Katie Stockton explains why Fairlead’s rules-based signals have kept its tactical ETF roughly half invested in equities despite her continued bull-market view.
The brief
Katie Stockton argues that the S&P 500’s secular bull market remains intact, but weakening breadth and narrow technology leadership make the advance less healthy.
The gap between index highs and small-cap weakness helps explain why diversified portfolios lag the S&P 500, even while mega-cap technology keeps leading.
Stockton’s rules-based signals have left Fairlead’s tactical ETF roughly half invested in equities, reflecting caution without calling for a full market reversal.
She uses relative strength to assess sectors and markets, while describing gold as a hedge, oil as range-bound, and Bitcoin as a volatile possible major low.
For year-end risk, Stockton points to credit spreads, the VIX, and fading semiconductor or broader AI-trade momentum as indicators that could change the outlook.
What was said on this episode
31 statements · 22 positive · 6 negative · 3 neutral
The secular S&P 500 bull market remains intact and generally healthy.
“the secular bull market is very much alive and I'd say mostly well at this point”
Listen at 1:50
The S&P 500 cyclical uptrend remains intact.
“The cyclical uptrend is even also intact.”
Listen at 2:00
Segments with monthly-indicator downturns may fail to regain their June highs.
“perhaps they will not be able to reach new highs relative to the peaks that they made perhaps in June”
Listen at 3:37
A negative advance-decline divergence often precedes weaker prices.
“It is often a precursor to something worse in price terms.”
Listen at 6:18
Oversold breadth could lead to broader participation in another market advance.
“it would suggest that the breadth is oversold. And we can get better participation to contribute to another uplay.”
Listen at 8:11
Narrow market leadership alone is not a reason to turn bearish.
“it's certainly not a reason to be bearish”
Listen at 10:16
Mega-cap concentration has accompanied the current bull cycle.
“it has been associated with this bull cycle”
Listen at 12:16
Improving breadth could occur alongside a weaker market.
“it might actually improve in what ends up being a weaker tape”
Listen at 12:25
Small-cap stabilization could become the basis for a relief rally.
“that then becomes perhaps the staging ground for a relief rally”
Listen at 14:58
Monthly-indicator downturns favor selling strength in small caps.
“it would put us on more sort of in the mindset, I guess, of selling strength potentially for the small cap arena”
Listen at 15:27
The secular Treasury-yield uptrend has probably resumed.
“the secular trend has or uptrend has probably resumed”
Listen at 17:05
The Treasury-yield breakout supports higher yields over the next year.
“supports higher yields, even over the next year, potentially”
Listen at 17:36
Treasury yields are expected to rise in a stair-step pattern.
“we do think that there will be more like a stair-stepping higher for yields”
Listen at 17:44
Credit-spread breakouts often signal more severe equity declines.
“when we see a breakout, that's where we often get into more than just a shallow pullback or, you know, sort of modest correction”
Listen at 21:30
Investors should wait for relief rallies before selling beleaguered sectors.
“I generally wouldn't advocate selling right here, right now, but rather waiting for those relief rallies.”
Listen at 24:26
Healthcare appears to be forming a long-term relative base against the S&P 500.
“There appears to be a long-term basing phase underway for healthcare versus the S&P 500”
Listen at 24:36
Diversification is almost always warranted in sector investing.
“Knowing that diversification is almost always warranted, frankly.”
Listen at 26:20
Investors should add semiconductor exposure during corrections within support.
“you should be willing to add exposure into that weakness”
Listen at 30:08
Semiconductor positions remain appropriate until technical deterioration appears.
“We're pretty open to positions in the sector until it tells us otherwise”
Listen at 30:46
Japan remains in a strong long-term uptrend without major sell signals.
“Japan's a good example of a pretty strong long term uptrend and one that doesn't have any big sell signals that we're worried about right now.”
Listen at 31:56
Gold is currently in a cyclical downtrend.
“Right now, it is a downtrend.”
Listen at 33:50
Gold should hedge equities effectively during a weaker market.
“As a possible hedge, if you're worried about equities, I do think it will serve that purpose well when we get into a weaker tape.”
Listen at 34:11
Gold has strong support near 3,900 that could limit further declines.
“there's even a support level, I think it's right around 3,900 as one that's pretty strong and could help limit the downside follow through.”
Listen at 34:38
Crude oil’s long-term momentum remains upward.
“Long-term momentum per crude points higher still.”
Listen at 35:38
Crude oil support near $87 determines whether its pullback persists.
“support being right around $87 per barrel. So that's our threshold on the downside to discern whether this pullback will persist.”
Listen at 36:02
Crude oil’s triangle resistance is near $105 per barrel.
“The resistance at the upper boundary of the triangle is... then closer to $105 per barrel.”
Listen at 36:24
Bitcoin has established a major low.
“we do think that a major low is in place”
Listen at 37:29
Bitcoin is expected to rise.
“we do think that Bitcoin will work higher.”
Listen at 38:16
Bitcoin’s volatility is part of its investment appeal.
“the volatility, I think, is the appeal of Bitcoin and others.”
Listen at 39:31
Semiconductors and the broader AI trade remain key market drivers.
“we're very hyper-focused on the momentum behind semis. Because we do think that semis and the broader AI trade are still key to the market at this time.”
Listen at 44:00
Technology must continue performing and exhibiting leadership for the market.
“we still think it's really tech right now that needs to not just perform, but exhibit leadership.”
Listen at 44:15
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.