The Week in Charts (11/7/25)

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The most important charts and themes in markets and investing…

1) Active Managers Go All-In

Active managers reduced their equity exposure down to 35% back in April when the S&P 500 fell below 5,000.

Last week, their equity exposure jumped over 100% (leveraged long) with the S&P 500 at 6,900.

This was their highest equity exposure since July 2024. What happened back then?

A -10% correction in the S&P 500.

2) Few Bears Left

The % of Bears in the Investors Intelligence sentiment index moved down to 13.5% last week, which is below 98% of historical readings.

It’s also lowest level we’ve seen since January 2018. What followed that?

A -12% correction in the S&P 500.

3) The Most Extreme Valuation I’ve Ever Seen

Palantir traded at over 240x forward earnings earlier this week, the highest valuation for a company of its size ($491 billion market cap) that I’ve ever seen.

The S&P 500 is currently trading around 3x forward sales.

What about Palantir? 87x

4) The $5 Trillion Club

10 years ago Nvidia had a market cap of $15 billion.

Last week it became the world’s first $5 trillion company.

That’s a 335x increase.

5) Record Concentration and the Narrowing Advance

The outperformance of big tech is leading to more record highs in terms of concentration within the S&P 500:

-Nvidia now makes up 8.6% of the S&P 500, the highest weighting for any single stock in the index on record.

-Nvidia, Microsoft, and Apple represent over 22% of the index, the highest on record for any 3 stocks.

-The top 5 holdings in the S&P 500 now make up over 29% of the index, the highest concentration we’ve seen.

-The top 10 holdings in the S&P 500 now make up over 40% of the index, the highest concentration on record.

The average stock in the S&P 500 is up 42% over the past 3 years versus an 86% gain for the cap-weighted index.

As a result of this underperformance, the ratio of the S&P 500 Equal Weight to the S&P 500 is now at its lowest level since 2003.

While the major indices all hit record highs in October, many individual stocks did not.

In fact, 40% of the Nasdaq 100, 42% of the S&P 500, and 52% of the Russell 2000 were down on the year at October’s end.

The market still looks strong, but it’s becoming a narrowing advance.

6) Big Tech, Big Profits

It was another record quarter for Big Tech, with:

• Apple Revenues growing 8% YoY to a new Q3 record of $102 billion and Net Income growing 92% YoY to a new Q3 record of $27 billion.
• Google Revenues growing 16% YoY to a new record high of $102 billion and Net Income growing 33% YoY to a new record high of $35 billion.
• Microsoft Revenues growing 18% YoY to a new record high of $78 billion and Net Income growing 12% YoY to a new record high of $28 billion.
• Amazon Revenues growing 13% YoY to a new Q3 record of $180 billion and Net Income growing 38% YoY to a new record high of $33 billion.

The combined revenues of these four companies hit a record $1.8 billion over the last 12 months, which was larger than the GDP of all but 15 countries.

7) More Rate Cuts and the End of QT

The Fed cut interest rates another 25 bps last week, bringing the Fed Funds Rate down to a new range of 3.75-4.00%. They have now cut rates a total of 150 bps since September 2024 and are expected to cut another 25 bps at the December meeting, bringing the Fed Funds Rate down to 3.50-3.75%.

The Fed’s balance sheet is now at its lowest level since April 2020, down $2.4 trillion from its peak in April 2022. That’s a 26.7% decline, the largest on record.

How much more QT is needed to unwind all of the QE from March 2020 through April 2022?

$2.4 trillion.

Is that going to happen?

No. At the FOMC meeting last week, the Fed said QT will end on December 1 of this year.

What happens after that?

If history is any guide, likely a move back to QE in the not too distant future.

8) More Sellers Than Buyers

US Home Prices rose 1.5% over the last year, the slowest growth rate in more than two years.

9 cities in the Case-Shiller 20-city index now have a negative 1-year return and with sellers outnumbering buyers by an estimated 500k, that number is likely to grow in the coming months.

9) A Few Interesting Stats…

a) “Sell in May and Go Away”

There’s no evidence supporting this catchy saying as the market has still been positive 72% of the time from May through October with an average annualized gain of 6.6%.

This year, the market did much better than that, with the S&P 500 gaining 24% from May through October.

b) 72% of all US data-center capacity is sitting in just 1% of counties.

c) The Ratio of the Defensive Consumer Staples ETF to the S&P 500 ETF has moved down to its lowest level on record, below where it stood at the dot-com bubble peak in March 2000.

d) Apple has bought back $709 billion in stock over the past 10 years, which is greater than the market cap of 487 companies in the S&P 500.

e) $10,000 invested in Amazon at its IPO in May 1997 is worth nearly $25 million today.

And that’s it for this week. Thanks for reading!

Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

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