Wake up! Fed not cutting rates? Index surging? From easy gains to high-level slaughter field.
Wake up, now US stocks may no longer be an 'easy bull market.' The index is oscillating at highs, AI keeps trending, but accounts are getting harder to profit from: the index hasn't fallen, but individual stocks are sharply diverging—gains today, losses tomorrow. The market is entering a capital slaughter phase in the late bull market? What determines the market is no longer just fundamentals, but the Fed, interest rates, and liquidity. AI has shifted from broad gains to a herd rally, with amplified volatility and shrinking opportunities. If you also feel it's getting harder, this content helps you see the real market structure. If you have this feeling, it means you have entered one of the most critical stages of the US stock market in 2026, a stage rarely discussed publicly inside Wall Street Called the late bull market capital slaughter phase. I'll directly state the three most important things today US stocks are still in a bull market structure, but no longer in a one-sided rally stage. AI remains the main line, but has shifted from a 'broad rally' to a 'leader-driven bloodsucking rally.' What truly determines market direction is no longer corporate earnings, but the Fed and liquidity If you remember just one sentence, remember this: now US stocks are not about whether they rise or fall, but about whether money is there Let's start with the most superficial phenomenon. The S&P 500 has risen for eight consecutive weeks by May 2026, a very rare trend. From historical experience, such a trend only occurs in two environments Extremely loose liquidity, market enters sentiment-driven phase, and now it's clearly the second, because there is a key change The index is rising, but volatility is amplifying. What does this mean? It means buy orders are still there, but sell orders are actively appearing. The market is no longer a one-sided consensus, but bulls and bears begin to tug-of-war Looking at the structural level, this US stock rally has a very extreme feature: it's not a broad bull market, but extremely concentrated Money is almost entirely concentrated in one place? AI infrastructure, including three major directions: computing chips, cloud computing, data centers You can understand it as one sentence: AI is devouring the liquidity of the entire US stock market. That's why Wall Street institutions are still raising targets Goldman Sachs, Morgan Stanley, and many institutions are pushing the S&P 500 target toward 8,000 points or even higher. But here is a very critical issue that many retail investors haven't realized: when institutions start to unanimously be bullish, the market often has entered the 'expected pre-overdraft stage' What does that mean? The future upside space has already been bought in advance by the current price. Now we enter the second layer of logic, also the core variable of the current market The Fed The past round of US stock gains essentially had only one logic: the market is trading on rate cuts. As long as the expectation of rate cuts exists Tech stocks can continuously see valuation lifts? But now this logic is starting to crack because the Fed is becoming cautious again, even leaning hawkish The key change is only one sentence: inflation hasn't fully ended, and is becoming more complex. The inflationary pressure you see now Is not a single factor But a triple structure overlay: service inflation is still stubborn, wage levels haven't significantly fallen, energy prices remain uncertain But the most easily overlooked point is that a variable is emerging? And it's very critical: AI itself is creating new cost inflation Simply put, AI is not only making money but also raising the cost structure of the entire economy. Data centers need electricity, chips need capacity Computing power needs equipment, talent costs are soaring—all these push up the 'underlying structure' of inflation, leading to a very dangerous result The Fed's task becomes complex? It is not considering 'whether to cut rates' but a more realistic question Can inflation get out of control again? This is why the market is repricing a risk: interest rates may not fall quickly, and in extreme cases, could even rise again. Next, this is a very critical point, and also the core most ordinary investors easily overlook. Let me break it down clearly. Since you've come this far, feel free to subscribe and follow Shuangxue so you don't lose me later What does a rate hike mean for the market? Rising cost of capital, simply put, borrowing becomes more expensive, corporate expansion slows, speculative funds decrease. U.S. Treasury yields rise, which directly sucks liquidity from the market because bonds become more attractive, and funds flow from stocks to bonds Tech stock valuations are compressed—this is the most deadly point. Because tech stocks are essentially a discount model: future money is 'discounted' in a high-rate environment? The higher the rate, the lower the valuation. So you'll see a very typical phenomenon: good companies are still good, but stock prices fluctuate violently Not because fundamentals have deteriorated, but because the valuation logic has changed This is also the real hidden risk of the current market: capital crowding. Today's US stocks have a very rare state: it's not a lack of money But money is all concentrated in a few places. After AI became the only main line, funds are highly concentrated in a few leaders This brings a side effect: market flexibility deteriorates, volatility increases, rotation accelerates. But an even bigger variable is emerging Super IPO expectations. For example, SpaceX, and OpenAI, plus a batch of AI unicorns If these companies start to go public in a concentrated manner, a very critical thing will happen. I explain it in the simplest words: new companies need money, meaning old companies will see fund diversion. Market money is not unlimited, so you'll see a contradictory phenomenon AI is still rising, but volatility is growing, because funds are moving while rising. Next, we enter the individual stock level, also the most critical risk amplifier today First look at Micron Technology. This stock can no longer be understood in the traditional cyclical stock framework. It is being repriced. In the past, Micron Was a typical cyclical stock, profiting from supply-demand fluctuations, with unstable profits and naturally low valuations. But now a structural change has occurred AI brings not growth, but a rewrite of demand structure. Data center expansion, large model training, cloud computing upgrades—all push up storage demand. So the pricing logic of funds for Micron now is: not a cyclical stock, but an AI infrastructure stock. Earnings data is extremely exaggerated Revenue nearly doubled year-over-year, profits surged several times year-over-year. This growth is no longer an improvement, but an explosion But I must remind you of a very critical sentence: the more such accelerating rising phases, the more likely violent oscillations occur, because the market has entered a state where everyone is making money, but no one dares to leave early Why is the AI rally entering its 'final most dangerous acceleration phase'? And how do the latest Fed signals directly affect the boundary of the AI bubble? We continue to discuss. If you've listened this far, you should gradually realize one thing: This market is no longer simply about 'bullish or bearish,' but has entered a more complex stage— Called: the index is fine, but trading becomes increasingly difficult. Why is this? Because now US stocks have essentially shifted from a 'trend market' to a 'structural market.' What does that mean? The index can rise, but internally it is torn. Funds are rotating back and forth, sectors are rapidly rotating, individual stocks are sharply diverging. You see a bull market, but many people's accounts experience, in reality, a volatile market or even a 'fake bull market.' If you still use a 'one-sided rally mindset' to trade, you will almost certainly be whipsawed back and forth. Let's first look at the index rhythm. The S&P 500's current state is very clear: the trend hasn't broken, but it has entered a high-level oscillating range. This phase has a very typical feature: the rising speed slows down, but corrections don't go deep. What does that mean? Both bulls and bears are testing. Bulls are unwilling to give up the trend, bears don't dare to directly smash. So the index shows a kind of 'dull knife market': slow rise, sideways, occasional pull-ups. But this type of market most easily causes one thing: it creates an illusion—'it seems it won't fall.' And real big volatility often brews in this phase. Now, the core reason why making money becomes harder. In the past, the market was: buy AI, easy gains. But now it becomes: AI itself is diverging internally. A simple logic: Even within the AI sector, funds are doing three things: continue to herd around core leaders, rotate among high-level leaders Switch from high-valuation AI to undervalued defensive sectors? So you'll see a phenomenon: some AI stocks are still hitting new highs, but some AI stocks have started to go sideways or even fall. This is not the end of the bull market; this is funds 'reallocating risk.' This phase is the most dangerous. Some AI companies report earnings that beat expectations, and after-hours prices surge 30-40 points This type of rally looks very cool, but it essentially has only one feature: emotions one-time overdraw future expectations. What is the most common next-day pattern for such stocks? Not continuing to rise, but: open high + large oscillation + surge and fall, because short-term funds have already locked in profits. Okay, after discussing the rhythm, let's talk about something more important: the risk in the current market is not a single risk, but a superimposed risk. I'll break it down into four layers for you. First layer risk: interest rate risk. This is the deepest and most core. As long as the Fed doesn't cut rates, or even shows hawkish signals, the market will be under continuous pressure. Note a key point: the market is not afraid of high rates now, but afraid of one phrase—'rates remain high for a long time.' Because this directly changes the valuation system. Previously, the market could give AI companies 30x, 40x or even higher valuations, But in a high-rate environment, this valuation will be 'systemically compressed.' Second layer risk: earnings realization risk. Now the biggest logic of AI is 'future growth.' But the problem is: future growth must be continuously realized. Once there is: growth below expectations, or capital expenditure excessive Or profit conversion efficiency declines, The market will be very sensitive. Because the current valuation essentially 'overdraws the next three years in advance.' Third layer risk: liquidity risk. This is something many people overlook. The market now has two opposing forces: On one side, AI continuously absorbs capital; on the other side, super IPO expectations are sucking away funds For example: if large-scale tech IPOs go public in a concentrated manner, one thing will happen: the market needs to 'free up money.' Where does the money come from? It can only come from already high-priced assets. So you'll see a phenomenon: the index can still rise, But individual stocks start to oscillate violently. Fourth layer risk: sentiment risk. This is the most easily overlooked but the most lethal. The market now has a very typical sentiment structure: 'the more it rises, the less fear; the more it falls, the more willing to buy.' This is actually a typical late-cycle bull market sentiment. All major top zones in history have a common feature: Not bad news appearing, but good news being infinitely amplified. Okay, let's peel another layer of institutional behavior—this is where many people truly don't understand. What Wall Street is doing now is not simply 'bullish or bearish.' Instead, they are doing these three things: push up core asset valuations, gradually lock in profits at highs, and position for the next structural shift in advance What does that mean? Simply put: telling a bull market story while switching positions. The rise you see is driven by trend-following funds. What you don't see is long-term funds slowly reducing positions. This is why the market looks strong but volatility keeps increasing. Next, we enter the most important part today: I'll directly break it down into three scenarios. First scenario: index opens high. If the S&P opens high and challenges the upper resistance zone: you must remember one sentence: it's not strength, but 'sentimental premium.' In this case, the most likely outcome is: surge and fall. Operation strategy: don't chase, just observe, wait for pullback. Second scenario: opens low and oscillates. If the market opens slightly lower: this is actually the healthiest state. Because it means the market is absorbing previous profit-taking. In this case: structural opportunities will appear, but only suitable for leader pullbacks, not a full-scale attack. Third scenario: intraday surge and fall. This is the most common and most dangerous. Characteristics: strong in the morning, weakens in the afternoon, oscillates at the close. What does this indicate? It indicates funds are realizing profits. This type of market most taboo: chasing highs + heavy position + overnight holding. Okay, finally we give a complete risk map summary: The real state of the current market is: not a bear market, not a crash, not a one-sided bull market But: High-level slow rise + internal severe divergence + sentiment repeated tug-of-war. So if you let me summarize the current US stock market in one sentence: I would say: The market is still in a bull market structure, but trading has entered a high-difficulty mode. Finally, I give you three very realistic judgment criteria to help you identify market phases: If the index is rising but you can't make money, it means the market is entering a divergence phase. If good news keeps increasing but volatility grows, it means entering the late sentiment phase. If everyone starts to get used to 'buying on dips,' it means risk is accumulating. Finally, I leave the question to you: The US stock market you see now: is it the starting point of a new super cycle, or a middle relay of a high-level structural bubble? Do you now tend to continue holding AI core assets, or start to gradually reduce risk? Do you think the Fed's next move will be to remain hawkish, or be forced to turn dovish by the market?
