The Week in Charts (4/29/26)

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The most important charts and themes in markets and investing…

1) Manias

As long as human beings are involved in markets, there will be manias.

What’s a mania?

A rapid, speculative advance that drives an asset’s price far above its fundamental value.

Why would human beings do that?

Because we are emotional, prone at times to feelings of irrational exuberance and driven to act by the greatest fear of all: missing out (FOMO).

Manias occur all the time in markets, and I want to highlight two recent examples:

• Allbirds spiked 876% after it announced it was selling its shoe business and pivoting to AI, bringing back memories of the 2000 internet bubble when companies were getting a boost to their share prices simply by adding “.com” to their names.

• Avis Budget stock soared 886% in a massive short-covering bubble reminiscent of the 2021 meme stock frenzy in Gamestop and AMC.

Neither of these manias had anything to do with underlying fundamentals. Allbirds has never made money as a public company and Avis Budget lost nearly $1 billion last year.

The advance was purely speculative, relying on the “greater fool” to buy their shares at ever higher prices. But euphoria eventually fades and all manias end in the same fashion, with sharp and often sudden collapse. We’ve already seen that in Allbirds and Avis Budget, which are down 70-80% from their recent highs.

The odds of you timing a mania successfully are not high. Which is why most invesotrs would be better off watching as a spectator and letting the greater fools trade among themselves.

2) Panics

As long as human beings are involved in markets, there will be panics.

What’s a panic?

A sudden, extreme, and widespread fear-driven sell-off in assets.

We see panics to varying degrees nearly every year in markets. Here’s a list since the March 2009 low…

But not all panics are equivalent. The more extreme panics tend to feature indiscriminate selling at some point, where there’s little differentiation among securities. Fear simply feeds on itself: as more investors panic, selling triggers further declines, leading to more panic until a “sell everything” mentality takes over.

One way to measure that is to look at the percentage of stocks in the S&P 500 above a certain moving average such as the 50-day. When this percentage is extremely low, it signifies a “sell everything” panic. The last 4 bear markets (2018/2020/2022/2025) all featured this at some point.

What should investors know about panics?

That joining the crowd and selling during one is rarely rewarded in the short run and never in the long run. In fact, the data suggests just the opposite: panic selling is typically followed by above-average forward returns. Panic should be embraced because fear tends to create opportunity.

We saw that once again following the April 2025 panic with the S&P 500 gaining 38% over the next year.

Which means that if you are going to sell, it’s much better to do so calmly and with a plan before the panic sell-off than with emotion during it.

3) All-Time Highs

The S&P 500 closed at an all-time high on Monday, its 10th of the year.

Does that mean anything?

The truth is that all-time highs, by themselves, are signaling nothing other than a market that has been going up. Just because every bear market has started from an all-time high doesn’t mean that every all-time high is followed by a bear market. Far from it.

Since 1989, the forward returns following all-time highs are actually slightly above average looking out 1, 3, and 5 years.

Why are all-time highs such a normal occurrence in markets?

Because all-time highs in the economy and corporate earnings are a normal occurrence as well. The economy and earnings both trend up and to the right over time.

On that point, S&P 500 earnings are on pace to hit another record high in Q1, rising 15% over the past year. That’s the 10th consecutive quarter with a record high in trailing twelve month earnings. It should come as little surprise then, to learn that the S&P 500 has hit 106 all-time highs during this period.

But what about the rest of the year?

Analysts are projecting more all-time highs in earnings in Q2, Q3, and Q4 with operating profits expected to rise 19% overall. If that’s what actually occurs, it wouldn’t be surprising at all to see more all-time highs.

4) Strength Begets Strength

The S&P 500’s recent 3-week rally of nearly 12% was good for the 13th biggest 3-week advance in the index since 1950.

At the same time, the Volatility Index ($VIX) has plummeted by over 43%, the 5th biggest volatility crash in history.

What tends to happen following big market advances and big volatility declines?

Further upward progress with above-average S&P 500 returns going forward. More often than not, strength begets strength.

5) What Will Warsh Do?

Kevin Warsh is likely to be confirmed by the Senate and will be the new Fed chairman before the end of May.

What will he do?

It’s seems likely based on his recent Senate hearing that he will advocate for cutting interest rates (he seems to believe inflation is actually lower than what the government statistics are reporting).

But Warsh only has one vote at the Fed, and most of the other voting members are not likely to concur with his reasoning at this point. Reflecting that, the odds of a rate cut at Warsh’s first meeting in June are only 1% and by year-end only 7%.

The stock market is at an all-time high. Credit spreads are near all-time lows. The economy is still in an expansion with the Unemployment Rate at 4.3%.

And inflation has been above the Fed’s target level for 61 consecutive months, averaging 4% per year since 2019. That is not typically an environment that would warrant or justify a rate cut and a much stronger case could actually be made for a rate hike.

With April coming to a close and no resolution yet to the Iran war, justifying a rate cut will become more and more difficult. CPI is expected to increase to at least 3.5% for the month of April and if the commodity spike continues we could certainly see a >4% reading for May. If that happens, the Fed’s next move could very well be a hike.

6) A Few Interesting Stats..

a) Dementia rates in the US have dropped by an astounding two-thirds over the last 40 years.

b) 30% of car buyers trading in vehicles in the US now have negative equity, owing an average of $7,200 on their old loans. A record 43% of these underwater car buyers are opting for 84-month (7-year) loans. Their average monthly payment: $932, the highest level ever recorded.

c) Americans spent over $109 billion on lottery tickets last year, which is more than they spent on movies, books, concerts and sports tickets – combined.

And that’s it for this week. Thanks for reading and have a great rest of the week!

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.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.

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