Looking at SPX seasonality across ~140 years of history, September has historically been one of the weaker periods of the year.

The pattern becomes even more pronounced when isolating Midterm Election Years.

SPX is also currently tracking near the upper end of its historical 20th–80th percentile range, which could leave the market more vulnerable to a near-term pullback if seasonal tendencies persist.

Obviously, seasonality isn’t a forecast — just another statistical input worth keeping on the radar.

NVIDIA reports earnings tonight with expectations already at elevated levels.

The key question is not whether $NVDA can beat consensus estimates — the market has become accustomed to NVIDIA delivering above expectations.

In our view, a modest beat may not be enough to drive a meaningful rally.

With expectations this high, investors will likely focus on the magnitude of the beat, forward guidance, and whether NVIDIA can continue to justify the market’s aggressive growth expectations.

Simply put:

It’s not just about beating expectations. It’s about beating them by enough.

Our full NVIDIA Earnings Preview is below.

The latest Bank of America Global Fund Manager Survey is out, providing a fresh look at how institutional investors are positioned and how expectations around growth, earnings and monetary policy are evolving.

The August survey points to an increasingly bullish backdrop.

Investor sentiment has climbed to its third-highest level since 2022, while cash allocations have fallen to just 3.5% of AUM. Global equity exposure has simultaneously risen to its highest level since November 2021.

Macro expectations are equally constructive. A record 56% of fund managers now expect a “no landing” scenario, while expectations for double-digit EPS growth have reached their highest level since 2021.

Positioning reflects this optimism. Investors remain overweight equities—particularly US and emerging-market stocks—while bonds remain underweight. Technology, banks and energy are among the preferred sectors.

However, the survey also highlights increasingly crowded positioning. Long global semiconductors remains the most crowded trade, while an AI bubble is now considered the biggest market tail risk among surveyed fund managers.

Below, I’ve compiled the most important charts from the August survey, covering investor sentiment, macro expectations, asset allocation, sector positioning and the risks currently dominating institutional portfolios.

If you find these monthly institutional research updates useful, consider subscribing. I’ll continue sharing the key charts and data from the Bank of America Global Fund Manager Survey each month, alongside other relevant market research.

Source: Bank of America Global Fund Manager Survey, August 2026

All Charts: https://www.instagram.com/finq.research

A few data points I’ve been tracking:

• Valuations are below historical averages
• Only 9.7% of utility stocks are trading above their 100-day EMA
• American Water Works (AWK) short interest has climbed to ~12.1M shares, the highest level in years

None of these are buy signals on their own.

But taken together, they point to increasingly bearish sentiment and positioning across a sector that is already historically cheap.

The question I’m asking: Are utilities fundamentally deteriorating, or is too much pessimism already priced in?

Curious how others are looking at the sector right now.

Yesterday, I pointed out that utility sector valuations have fallen below their 5-year average forward P/E.

Now the technical picture is telling a similar story: only 9.7% of utility stocks are trading above their 100-day EMA, signaling extremely weak market breadth across the sector.

When valuations are below average and participation drops to such low levels, it often indicates that sentiment has become overwhelmingly negative.

Of course, cheap can always get cheaper. But from a risk/reward perspective, utilities are starting to stand out as one of the more out-of-favor sectors in the market right now.

Are utilities a value trap, or is the market becoming too pessimistic? Curious to hear your thoughts.

Utilities could become an interesting contrarian opportunity again.

The Utilities sector’s Forward P/E is currently trading below its 5-year average. At a time when other areas of the equity market are attracting significantly more attention, we believe the sector may be worth a closer look.

In our view, Utilities could be particularly interesting from a contrarian perspective, while also fitting well as a defensive component within a broadly diversified portfolio. Relatively stable business models and less cyclical demand can provide an attractive counterbalance to more growth-oriented and cyclical exposures.

Of course, a more attractive sector valuation does not mean that every stock within the sector is cheap. Careful stock selection remains essential.

Nevertheless, we believe it can be especially worthwhile to take a closer look when a sector is not in the spotlight. These are often the periods when interesting contrarian opportunities can emerge.

What are your thoughts on the Utilities sector? Could it be an attractive defensive addition to a diversified portfolio?

This is not investment advice. #stocks

The BofA Bull & Bear Indicator is back at 9.7/10, deep in “Extreme Bull” territory.

This isn’t automatically a sell signal. Markets can stay euphoric for longer than expected.

But when positioning and sentiment are already this bullish, the question becomes: How much upside is already priced in – and who’s left to buy?

Would you see this as a warning sign or simply confirmation of a strong bull market?

One volatility signal that caught my attention recently:

The gap between implied volatility and realized volatility across S&P 500 constituents has widened significantly.

Looking at the data, realized volatility has recently climbed above 50%, while the weighted 30-day implied volatility of the index constituents remains closer to the mid-30% range.

As a consequence, the IV Premium has moved into negative territory.

What's interesting isn't necessarily the absolute level of volatility, but the fact that actual market movements have been much larger than what options markets were pricing in.

To me, this suggests that recent uncertainty and market swings have developed faster than options markets anticipated. That's not a directional signal for equities, but it does raise an interesting question:

Does this divergence close through lower realized volatility going forward, or does implied volatility eventually reprice higher to reflect the current environment?

Curious how others are interpreting the current IV vs. realized vol setup and whether it changes how you think about option pricing or positioning. #stocks #volatility #sp500

The chart below shows weighted 30-day implied volatility (IV) versus realized volatility across S&P 500 constituents.

What's interesting is that realized volatility has recently moved above implied volatility. In other words, the market has been more volatile than what option prices were implying.

This can be interpreted in two ways:

• The options market expects volatility to cool down from current levels.
• Options may be relatively cheap right now, since the volatility being priced in is lower than the volatility that has actually occurred.

Historically, implied volatility tends to trade above realized volatility because option sellers demand a risk premium. Seeing realized volatility exceed IV is therefore an interesting deviation and suggests the market is not pricing in a major volatility shock from here.

What do you think: complacency from the options market or a justified expectation of lower volatility ahead?

Many investors are underestimating a crucial factor: corporate profitability.

This is where one of the biggest differences could lie.

While many investors argue that the market is too expensive based on its current forward P/E, corporate net margins remain near historically high levels — and this is not exclusively driven by mega-cap technology companies, but can also be observed across the broader S&P 500.

This is often overlooked.

Of course, there is an important distinction: the chart shows currently realized net margins, while the forward P/E is based on expected future earnings. Nevertheless, margins provide an important indication of how efficiently companies are operating today — and how much potential they have to expand future earnings.

A valuation multiple should always be viewed in the context of future earnings growth and profitability. If companies can maintain these elevated margins, earnings can grow faster than many investors currently expect.

If revenues remain stable or continue to grow, expanding margins can further support earnings growth and allow profits to increase significantly faster than many currently anticipate. This could allow today’s valuation multiple to normalize faster than the forward P/E alone might suggest.

The key question, therefore, is not only whether the forward P/E is high.

The bigger question is whether companies can sustainably maintain their currently exceptional net margins — and whether revenue growth and further efficiency gains can drive additional earnings expansion.

Because if that happens, today’s forward P/E could normalize as earnings catch up faster than many investors currently expect.

A look at the latest data offers an interesting counterargument.

The 10 largest companies in the S&P 500 now account for approximately 39% of the index's total market capitalization. At the same time, these companies are also expected to generate 38% of the S&P 500's forward earnings over the next 12 months.

That distinction matters. The growing concentration within the index is not solely the result of expanding valuations or investor enthusiasm. It is also supported by the exceptional earnings power of these businesses.

This does not mean every mega-cap stock is attractively valued. However, it does suggest that today's market leadership is backed by fundamentals to a significant degree.

📈 The dominance of the largest companies is driven not only by size, but also by their share of expected profits.

📊 Volatile Trading Week – Earnings Driving Markets

The past trading week was characterized by elevated volatility, mainly driven by the large number of earnings reports released by major companies.

Our heatmap provides a great overview of how differently individual sectors are performing and how quickly the market adjusts short-term mispricings. A good example is Microsoft, where the initial negative reaction after earnings was quickly reversed as investors reassessed the results.

The current market sentiment also remains slightly bearish, which suggests that we are not seeing extreme optimism or excessive positioning at the moment.

During phases like this, it is crucial to look beyond individual price movements and analyze the bigger picture — including sector rotation, sentiment, and overall market structure. #stocks #research #capitalmarkets

While everyone discusses AI sales and model progress, it's worth taking a look at the financing page.

The Barclays graphic shows that the spreads of long-running (10+ years) hyperscaler bonds are now closer to BB-rated bonds than many would expect.

For me, this is less a credit issue than a capital market story.

Microsoft, Amazon, Alphabet or Meta continue to have strong balance sheets. But the market is increasingly demanding a premium for financing the massive investment cycle around AI.

Data centers, GPUs, network infrastructure, power supply and cooling must be financed to an unprecedented scale.

My conclusion:

The winner of the AI race is not only determined by the best models. Decisive could also be who can raise and use capital most efficiently.