Will The A.I. Stock Juggernaut Run Out Of Steam Soon? | Katie Stockton

**Katie Stockton** (0:00)
It's very, very clear that the AI trade still has momentum, and it still has relative performance, and it's still allowing for breakouts to be generated in stocks that really appear overextended by other metrics, and of course, probably are over-stretched in terms of valuations based on history. So the market is just telling us that there is momentum behind the trade. We want to respect that.
And it's our belief that there is the potential for that to continue in 2026, but not without some kind of pause. For some, a pullback might look imminent based on our measures. For others, I think it will be delayed. But collectively, there is enough loss of breath, so market participation, and enough of a loss of leadership to suggest that we will get digestion.

**Adam Taggart** (1:00)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. As of the recording of this video, the S&P 500 index is trading at a new all-time high within less than 100 points of the big round 7,000 milestone. And Nvidia just became the first 5 trillion market cap company in history. So the bull market and stocks appears to be doing just fine. Despite the skeptics worries that current valuations are far too high when compared to fundamentals. So will the party continue on from here into 2026? Or will the new year and the current three-year streak of double-digit returns for stocks? To discuss, we're fortunate to welcome back to the program, market technician and portfolio manager, Katie Stockton, founder and managing partner of Fairlead Strategies. Katie, thanks so much for joining us today.

**Katie Stockton** (1:51)
Of course, good to be with you again, Adam.

**Adam Taggart** (1:54)
Thank you. Katie, I want to note that we're recording this just minutes after the FOMC gave their latest guidance. They have just cut the interest rate as expected by 25 basis points and they also did as largely expected. They announced that the end of QT will be coming up here, I think starting on December 1st. So a lot of dust still in the air. I appreciate you sitting down with us, but I'm sure you've got a lot that you and your firm need to go analyze.
But anyways, we'll roll up our sleeves and dig into it. I did note this for you before we turned on the camera, but I want to note for the viewers, the very cool Fairlead Strategies print behind you, very tasteful and very reminiscent of another print series that you and I know from a couple of decades ago and I just love the aesthetic.

**Katie Stockton** (2:44)
Thank you, Adam. Yeah, I know it's good. It reminds me of San Francisco too.

**Adam Taggart** (2:49)
Yeah, if any San Franciscans are watching, you probably remember the series of all the national parks and whatnot from San Francisco and the surrounding era that are in a similar aesthetic. All right, well, look, let's just start with this. S&P 7,000, when do we get there? Today?

**Katie Stockton** (3:06)
End of this week?

**Adam Taggart** (3:08)
Next month? What do you think?

**Katie Stockton** (3:09)
Things do happen quicker than we expect them to oftentimes with this market. And we had a summertime breakout. So when the S&P 500 cleared resistance back in June, we came to a measured move objective of about 68.80. And we assigned that objective for Q1 of next year, simply based on the trajectory of the uptrend. So this is all based on technical analysis, all price-based, trend, momentum. So those are our inputs. And we felt like it was a pretty reasonable upside objective, but maybe not for October, but rather early 2026 But here we are, and these aren't resistance levels per se, but they do tend to see some consolidation. So I think it'd be natural to see the S&P 500 take pause here. But so far, we've just seen really not at all a meaningful loss of momentum. It's been remarkably strong, and these pullbacks that last just two, three days seemed to give way to instant buying pressure. We thought we saw the 20-day rollover a couple weeks ago, and then it just resumed higher. So this puts the market to us at a pivotal moment in a way, as it absorbs today's FOMC announcement, as it will absorb the earnings coming from the mega cap complex this week. So we want to see how we finish this week as a way to understand, is risk somewhat heightened as we come into November or not?

**Adam Taggart** (4:45)
All right. So let me ask you this then. You said it should have shown remarkable momentum, and in the intro, I gave a nod to the doubters here who were just looking at the multiples to earnings and saying, dear Lord, these are some of the most stretch we've ever seen.