Callum Thomas — Weekly S&P500 ChartStorm — 21 June 2026

1. Mag-7 vs the Rest — the giants flounder while the S&P 493 hits new highs

• The prevailing multi-year narrative is "it's all about Mag-7," so it's a surprise to see Mag-7 floundering through June while the S&P 500 ex-Mag-7 (the "S&P 493") is out to new all-time highs.
• (Source: MarketCharts.com, inspired by The Morning Print.)

2. MAGS vs XMAG — bullish rotation (leaders pass the torch to laggards)

• Mag-7's relative-performance collapse is a similar scale to Q1's — but Q1 was bearish rotation (the previous leaders led the market lower). What's happening now is bullish rotation: the previous leaders pass the torch to the previous laggards.
• "Probably the most bullish pathway for the US stockmarket right now" — bull-market-broadening; maybe the cap-weighted index doesn't rise as fast, but there's a lot of rotation under the surface. (Source: @MikeZaccardi.)

3. Equal-Weight vs Cap-Weight — the relative line attempts a (double?) bottom

• The equal-weight vs cap-weight S&P 500 relative line: it's normal for equal-weight to outperform over the long term; wild deviations from trend can confirm structural weaknesses/vulnerabilities; and the line looks to be attempting to bottom (a double bottom?) — reinforcing the rotation theme.
• The flip side: be wary of bearish rotation where, after an extended bull, the previous leaders run out of steam and — given their larger weight — drag the index down. (Source: Topdown Charts Professional.)

4. Cycles in Valuations (and Profitability) — high valuations justified by high ROE, but ROE is cyclical

• Confirms the bullish narrative that valuations are high for a reason: high profitability.
• The bearish counterpoint: return on equity is cyclical. If profitability is damaged (AI capex bust, economic downturn, some other shock), the justification for high valuations fades and valuations mean-revert. That's the bear case — and it can be monitored specifically (no signs yet). (Source: @ISABELNET_SA.)

5. Cashed Out — investor cash allocations bouncing along the bottom

• Another echo of the warning theme: investor cash allocations bouncing along the bottom — which has often been a topping sign in the past. (Source: @i3_invest via @TheChartReport.)

6. Margin Debt Warnings (1/2) — margin debt vs M2 surging

• A bearish warning flag: a surge in margin debt vs M2 (margin debt normalized against the money supply). (Source: @VISUALDATAT.)

7. Margin Debt Warning (2/2) — 4th-fastest expansion in recent history

• Thomas's own margin-debt risk indicator, updated to the just-released May data: the rate of expansion in margin debt is the 4th fastest in recent history — consistent with a heightened downside-risk alert.
• Caveat: the previous 3 major topping signals took a few months to work, but "the message is pretty clear here." (Source: Topdown Charts Professional.)

8. Seasonally Slippery — seasonality sours late-July into Oct/Nov

• Zooming to the immediate term: seasonality sours from late-July into Oct/Nov.
• Caveat: stocks have a habit of rallying from mid-June to late-July — so maybe there's a bit of a seasonal bull trap being set first.

9. Seasonal-Cycle Surge? — election-cycle turbulence then a rally

• The election-cycle seasonal pattern gives the same conclusion: rough and tumble heading into the mid-terms — but afterwards the historical tendency is a solid rally. (Source: SnippetFinance.)

10. Industrial Revolution — industrials break out (bullish on real activity)

• A silver lining, in line with the bullish-rotation theme: industrial stocks have broken out.
• Industrials benefit from stronger real activity, hard capex, and improving global growth — all currently underway "in earnest." (Source: @DrJStrategy.)

Portfolio Strategy Notes — "Treasuries are NOT Trash" (contrarian pro-bond call)

• Like cash, investor allocations to treasuries are at record lows — stocks have had a dream run while bonds had a disastrous one. But both series look cyclical (one mid-upcycle, one mid-downcycle), and the next steps "seem logical." Investors are heavily underexposed to bonds, especially treasuries.
• The diversifier debate: bonds' bad run since 2020 led some to claim they're no longer a good diversifier — but bonds never perform well in an inflation shock (2022); for that, use commodities for defense.
• Where bonds do win: deflationary downturns — activity declines, inflation shrinks (or tips to deflation), the Fed cuts and expands the balance sheet, and investors sell risk to buy defensives like bonds (often too late). Suggested action: gradually build bond exposure at the cost of stocks (new money into bonds; rebalance profits out of risk assets).
• AI as a swing factor: eventually the AI capex boom turns to bust (dampening growth), while rising AI adoption brings deflationary effects — both at once "could be a recipe for strong returns for bonds."