Purple Drink's 7/4/2025 Market Recap

That Happened Fast

Hi everyone, hope you are all enjoying the beginning of this long holiday weekend with your families and loved ones. We live in a kickass country that deserves a birthday celebration every summer.

For those who may be less familiar with my recent posts, I have been extremely bullish on US equity markets since mid/late April, noting:

• Capitulation out of the post-Liberation Day lows

• Multiple breadth thrusts including the Zweig Breadth Thrust we anticipated in April

• A Power Trend triggering recently, which indicates an “all dips get bought” environment until further notice

• The newly elected White House shifting sharply from a message of austerity during Q1 to the realization that they have to overheat the economy in an attempt to “outgrow the debt” - completely unrealistic, but informative for risk-on

• Persistent bearish sentiment and lack of price recognition, overall a sad state of affairs for the bears

Let’s review the current state of the market.

MARKET SUMMARY & OUTLOOK

SPX accelerated its drift higher this week once it took out prior all time highs, closing the week at $6,279. Since bottoming in early April, the stock market is up 30% in less than 3 months, a truly historic move that will be worth referencing in future years as a textbook recovery off capitulation.

In line with multiple comments on the topic in this Substack over the last few months, calls for $6,500+ SPX by the fall now seem much less contrarian than they did just a few weeks ago. The move we have seen since April has exceeded most analogs, with the 2020 Covid capitulation serving as the only analog I can think of with quite as rapid (or even more rapid) of a recovery to new all time highs. So now what?