Most of you are still on vacation.
We barely scratched 200M shares turning over on SPY last week – HALF the usual volume and, given the fat first-half profits we’ve all been booking – who’s racing home from a long weekend just to make more money? So today is going to be a silly day and there will be nothing to read into it and, frankly, there’s not much going on so – go have a nice breakfast, take an early lunch – take the afternoon off – you’ve earned it!
The most exciting thing going on is the forced buying of SpaceX (SPCX) by index funds as it jumps into the Nasdaq tomorrow and we are long the SPCX Sept $235 calls at $5 and we’ll see how that goes today with the stock testing $165 pre-market:
We don’t LIKE SpaceX – we just like math and all this forced buying is giving us a high-probability win on the long calls. Friday’s volume on SPCX was 61M shares at $160 = $9.7Bn worth of shares being bought AND sold but today, over $4Bn worth of share MUST be bought AND NOT SOLD by index funds BEFORE THE CLOSE. That is a pretty huge trade imbalance and, since no one is going to be taking a profit at $170 and even the people who got in at $150 only make 20% at $180 – I think we may get a nice pop before the sellers begin to balance things out.
Meanwhile, analysts are tripping over themselves to call S&P 8,000 for 2027. This is based on earnings estimates of $2,350,000,000,000 NET, AFTER TAXES, 36% of which is supposed to be $845Bn earned by the Magnificent 7 – well over $100Bn EACH! This is, of course MADNESS and is based projections that only come true if this AI CapEx boom keeps compounding and a single guide-down from the 7 can trash the ENTIRE market – all at once!
Of course, 7 is a very arbitrary cut-off and it gets MUCH WORSE if we pull back because the Top 10% of the S&P 500 (50 stocks) generate 65.9% of the projected earnings (2/3!) leaving 1/3 for the bottom 450 companies – an average of 0.074% each – JUST LIKE OUR F’d UP SOCIETY DISTRIBUTES MONEY!!!
And these are the TOP 500 companies in America – imagine how much it sucks to be in the Russell 2,000 or, even worse, the Wilshire 5,000!
| Tier | # of companies | Share of S&P 500 earnings | Share of index weight |
|---|---|---|---|
| Top 7 (Mag 7) | 7 | ~37.6% | |
| Top 10 | 10 | 35.4% | |
| Top 20 | 20 | ||
| Top 50 | 50 |
The market is two VERY DIFFERENT things – it is a runaway train with an AI-levered engine with a 10x larger, stalled caboose that is heading into a very dangerous curve – at an ill-advised speed (see: “What Next Wednesday – Hyperscalers Run out of Cash!“). And, of course you are thinking: “How can a group of companies making $845Bn run out of money?” And the answer is, of course, BY WASTING IT!
The only way to go broke while making $845Bn is to spend $1.3 TRILLION trying to stay ahead of each other in an AI race – that may not even produce the desired results that they would HAVE to produce to justify the 30x average multiples being carried by the Mag 7, the Top 20 and even the Top 50 – DESPITE making 66% of the S&Ps total earnings.
The bottom of the S&P 500 really bring that down like Stellantis (STLA), who are making $1.5Bn this year and $4Bn next year – yet you can buy the ENTIRE company for $16.5Bn or about 4x next year’s earnings. Barrick Mining (B) will make $8Bn next year yet you can buy them for $65Bn, which is 8 times earnings – THAT is how the S&P 500 gets to 20x forward earnings – NOT because the Magnificent 7 is doing so well but because the bottom 450 are being completely ignored!
Not by PhilStockWorld, of course, STLA was a Top Trade Alert for our Members on July 1st, Barrick was a Top Trade Alert from May of 2025 and is in ALL of our Member Portfolios. In fact, 85% of our Top Trade Alerts from the second half of 2025 were winners ($500,000 gained!) and I’m pretty sure we did just as well in the first half of 2026 for our Subscribers (review coming soon)!
In fact, on December 26th, we wrote: “Fa-La-La Friday 10 Boxing Day Trade Ideas for 2026 (Members Only)” and now, for the cheapskates who didn’t subscribe – I’ll show you what you missed 6 months later:
| Symbol | Macro Thesis (Warren 2.0) | “Be the House” Target Entry |
| NEM | Inflation hedge against OBBTB deficit spending. | $90 – $95 (Wait for a post-holiday dip). |
| STLD | Protected by the July “Reciprocal Tariff” wall. | $150 – $160 (Solid support floor). |
| GLW | The “Glass Backbone” of the AI data center surge. | $80 – $85 (Value entry). |
| MP | National Security asset; $110/kg DoD price floor. | $40 – $45 (Ignore the 75x P/E; buy the asset). |
| TECK | Copper pure-play for the 2026 grid expansion. | $38.00 – $42 (Strategic long-term load). |
| JNJ | Defensive anchor for a “Weak Dollar” (100) regime. | $190 – $200 (Classic Davis value). |
| QCOM | Capturing the “On-Device AI” shift as Search dies. | $160 – $165 (Buy the tech cycle). |
| ON | OBBTB bonus depreciation play for industrial semis. | $45 – $50 (Deep value/Cyclical low). |
| ET | Toll-booth income for US energy independence. | $16 – $16.50 (Income Portfolio primary). |
| LMT | Insurance against rising July trade tensions. | $450 – $460 (Safe haven defense). |
I don’t need to go over the trades: The charts speak for themselves:
And yes, we called that top in Tech and got out and our Top Trades for the first half or 2026 have been mostly picked from that bottom 450 – where the real market values are sitting – ignored by the MSM and your fellow traders because they are too “boring” to bother with.
Using our trademarked “Be the House – NOT the Gambler” trading strategies, we don’t need to chase high-flying tech. We can make our money by simply trading good value stocks and generate exceptional returns – even if they remain relatively flat. Going up is just a nice bonus for us.
We’re not going to tell you to join us for the second half of the year – if you can afford not to subscribe – that’s your decision. I don’t know what stock market newsletter you do subscribe to – I haven’t found any that come close to our PUBLISHED trade performance – please let us know who you use that’s better and more transparent – we’d love to interview them!
Now, since you can’t have a Fundamental Investing Newsletter without Fundamentals, let’s take a look at this week’s upcoming data so we can stay ahead of the market:
Oh gosh, it’s boring! PMI and ISM today, NOTHING of note tomorrow, Fed Minutes and Consumer Credit on Wednesday (during our Live Trading Webinar) and that’s it? That is so sad! Lots and lots of note auctions but that’s not surprising from a Government that’s financing a $3 TRILLION Deficit this fiscal year. Wars, ballrooms, reflecting pools, ICE…
There aren’t even any good earnings – no wonder everyone is still on vacation:
I’ll tell you what is exciting, our very own AGI Round Table’s Podcast was ranked #3 in the country this week and their Substack is gaining traction as well – not bad for a group of non-human entities running their own site, right?
I apologize for what is looking like a boring week but that means it’s a good time to do some reviews and we’ll definitely be looking at our $700/Month Portfolio tomorrow and hopefully we can get to the Top Trade Review for the First Half of 2026 and then, next week – it’s already time to review our PSW Member Portfolios and then – it’s EARNINGS SEASON!!!
So let’s enjoy the calm, while we can…
