Adam Turnquist argues the S&P 500’s advance is intact and likely to remain buyable on dips, despite some near-term overbought conditions. He says the rally is being driven by mega-cap leadership, resilient earnings, and AI-related capex, while cautioning that oil, rates, and Middle East headlines can create a short pullback before the next leg higher.
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Adam Turnquist, chief technical strategist at LPL Financial, says the S&P 500’s move to record highs is best understood as part of an ongoing mega-cap-led bull market rather than a fragile, overly narrow rally. He acknowledges that breadth is not perfect — only about 54% of S&P stocks are above their 200-day moving average, which is below the typical level seen when the index is near highs — but he argues that this is not a warning sign by itself. In his view, the market regime has favored large-cap leaders for years, and that pattern has continued because the biggest names are also contributing the most to earnings and AI-related investment. His core tactical message is that the rally may pause or pull back, but that such weakness would likely be buyable. …
Near term, the setup is tactical but still buyable: the index is stretched, so a pullback toward 7,000 or the 20-day average could happen before the next move. The main immediate risks are higher oil, higher rates, and any negative surprise from Middle East headlines or Nvidia earnings.
Over the next few weeks to months, the base case is a bullish continuation after a routine consolidation, provided earnings and AI capex remain strong. If breadth improves and support holds, the market likely keeps grinding higher; if momentum rolls over and leadership weakens, the breakout becomes more vulnerable.
Structurally, he is describing a mega-cap-led bull market where AI spending, earnings power, and disciplined leadership selection keep supporting equities. The lasting implication is that breadth weakness may be normal in this regime, not automatically bearish, so investors are better off aligned with the dominant winners than fighting the trend.
The S&P 500’s rally is still healthy even though breadth is not ideal.
He argues leadership is narrow in places, but this is consistent with the current bull-market regime and not a warning sign by itself.
Only about half of S&P 500 names are above their 200-day moving average, which leaves room for breadth to expand.
He uses the 54% figure to argue the rally is not fully broad-based yet, but could broaden if it continues.
A pullback toward the 20-day moving average or the 7,000 level would be a normal and attractive buying opportunity.
He explicitly says those levels should act as support after the breakout and that a 5% decline could still be constructive.
When you look underneath the S&P 500's record highs, what do the charts tell you about the health of this rally?
Adam says it's a mega-cap story — mega caps lead through resistance and then others follow. Breadth is okay but not great. Midcaps, small caps, and micro caps are also breaking out, so he pushes back against the idea it's a very narrow market.
Is a handful of mega cap stocks doing most of the heavy lifting a warning sign?
Adam says that's the regime we're in. There's a negative correlation between market breadth and 12-month returns since the bull market started. Mega caps contribute the most to earnings, with tech over 50% earnings growth, so the best players are performing well.
Why does it matter that only about half the S&P 500 is above its 200-day moving average, and is that a sign of more room to run or a warning?
Adam says 54% is not great — normally when the market is within 3% of a record high, about three quarters of stocks are above their 200-day moving average. So there is room for breadth to expand. He sees plenty of gas in the tank given underwhelming retail participation, and thinks pullbacks will be bought.
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