A technical-market debate between Jonathan Krinsky and Mark Newton on the rest of 2026. Both are constructive near term, see breadth improving and expect some rotation out of stretched AI/semis into cyclicals, financials, healthcare, and REITs. The main disagreement is magnitude and timing: Krinsky is more cautious on semis/tech and thinks a 20-25% tech pullback could arrive by late summer/fall, while Newton thinks the broader market can keep grinding higher and that any tech consolidation is more likely a healthy pause than a regime break.
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This is an interview/debate focused on where U.S. markets head in the second half of 2026. Adam Taggart frames the discussion around the S&P 500 and Nasdaq being up strongly year-to-date and introduces Jonathan Krinsky as the more cautious voice on semis/AI and Mark Newton as the more constructive one. The core thesis from both guests is not outright bearishness but rotation: they expect the market’s leadership to broaden away from the highly concentrated AI/semiconductor trade into other sectors that have lagged but are now showing better price action. Krinsky’s view is that the market has already been “pre-trading” the de-escalation in the Middle East and the pullback in crude, and that this should allow breadth to improve even if the indices struggle to keep matching recent returns. …
Tactically constructive for the broad market, with rotation into cyclicals, banks, healthcare, and REITs while semis/AI remain the crowded near-term risk. The main short-term danger is a tech-led air pocket, not an all-market collapse.
Base case is a choppy but still higher market over the next several weeks to months, with technology likely needing consolidation before leadership can broaden again. The key confirmation is whether breadth and non-tech sectors keep improving while rates/crude stay contained.
Structurally, the U.S. remains the primary market engine, but leadership is becoming more concentration-sensitive and less index-friendly. The long-run question is whether AI is a multi-year capex cycle or a late-cycle blowoff that eventually forces a broader regime change.
Semiconductors have gotten very stretched with a monthly RSI around 90, making them a poor risk-reward for buy-and-hold investors between now and the midterm election.
Newton cites an extremely elevated monthly RSI reading in semiconductors as a technical reason for caution.
The semiconductor and AI cohort of stocks has become so extended and dominant that expectations are unlikely to be met, posing downside risk.
Jonathan argues the tech/AI group's extreme extension and dominance creates risk of disappointment on expectations.
The AI trade / tech semi momentum unwind could catalyze a rotation from tech into cyclical sectors like financials.
When the market reprices rate expectations, money rotates from high-momentum tech to lagging cyclicals.
What is your current assessment of the financial markets right now?
Krinsky says the year started with rotation and broadening after late 2025, then the Middle East escalation caused energy to surge and markets to come in. By late March that recovered but was led by tech/AI, which has become so extended and dominant that expectations may not be met. With energy pulling back and a Middle East resolution, he expects more broadening — but overall indices might struggle if rotation continues. The semi cohort remains resilient but that's where he sees the most risk heading into the next few months.
What is the likelihood and magnitude of a Q3 correction in the market?
Mark says it's premature to talk about a correction until three technical factors fall into place: 1) meaningful breadth deterioration (currently the opposite is happening with breadth expanding), 2) sentiment getting much more optimistic (currently sentiment is subdued, not frothy), and 3) defensive strength/rotation into staples, telecom, utilities, healthcare (not seeing enough yet). He sees no evidence June lows will be broken and expects choppiness resolving higher into late July.
What impact will the midterm elections have on markets, and will the market reaction differ depending on how the elections go?
Jonathan views midterms like any seasonal pattern — the odds of a storm are higher but it's not imminent. He notes seasonal weakness in spring and fall lines up with midterm cycles, but a correction in July/August could front-run any expected fall weakness. Mark adds it's not prudent to use politics to gauge markets, noting the GOP could lose the house depending on food/gas prices, and he'd be a buyer on any Q3 weakness. Both advise against trying to anticipate market reactions to political outcomes, citing 2016 as an example where consensus was wrong.
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