Benjamin Cowen argues the S&P 500 likely has more upside first, but expects a small summer pullback and then a larger decline later in 2026, with timing framed around an S&P/M2 fractal and midterm-year seasonality. He also says Bitcoin is likely to lag and then get hit harder if stocks correct, while he personally remains long diversified index funds and favors international stocks more than U.S. stocks right now.
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Cowen’s core thesis is that the S&P 500 is not yet showing the kind of distributive top that would justify aggressively fading the rally, but the market is probably approaching a tactical cooling period in the June-July window, followed by a larger correction later in Q3 or early Q4. He frames this as “dubious speculation” rather than a hard prediction, but the call is still directional: a small summer dip first, then a more meaningful drawdown later in the year, with a possible rebound after each leg down. The main evidence he cites is a historical pattern or “fractal” involving the S&P 500 divided by M2, which he says has lined up with prior market corrections since the late 1990s. He points to the 2023 correction as a 1997-style analogue, the 2022 decline as a larger match, and the current run-up as potentially still fitting the same framework. …
Tactically, the S&P still looks trend-positive, but the risk/reward is shifting toward a summer pause after an extended run. If equities finally crack, Bitcoin could be hit harder and faster than stocks.
Over the next few months, he expects a small correction first and possibly a larger one later in the year, with midterm-year seasonality and the S&P/M2 framework pointing to late-Q3 or early-Q4 weakness. The view would be validated by fading momentum and weaker breadth; it would be weakened by continued clean highs.
The broader regime message is that investors should not rely on a single high-beta asset class to compound through every cycle. Cowen’s structural preference is for diversified exposure, with non-U.S. equities and metals playing a bigger role when risk appetite becomes uneven.
Stocks likely fell about 10% after his February warning, validating his earlier correction call.
He says he called for a 10% drop in February and that the market in fact dropped about 10%.
If labor-market feedback loops remain absent, the market can return to all-time highs.
He says layoffs and initial claims are still low and that without a sufficient labor-market deterioration, the market can climb higher.
The S&P/M2 fractal still suggests a correction window in summer 2026.
He says the pattern from 1996 onward still matters and may imply a June-July correction.
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