How Does This All End? Is It Time To Sell The Stock Market? LFG Daily - January 26, 2026

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We’re about a percent away from all-time highs, long-term valuation measures are stretched, and even shorter-term positioning surveys like AAII for individual investors and NAAIM for professional investors show investors are pretty engaged in this market. Have assets pushed up about as much as they can?

Perhaps, but I think there’s still room for more. Japan is attempting to stimulate their economy, as is China and the US. Admittedly, something could break in there, in the form of bond markets falling or economies slowing, but that hasn’t happened yet and there’s no obvious sign it will.

In the meantime, the market has tailwinds and that can continue for a while. Additionally, there seem to be plenty of people trying to call the top on these markets. That often creates a hedged market where we grind up as hedges get burned and lead to forced buying.

How does it all end? I’d say two basic ways. Usually, either something blows up or people stop hedging, embrace the rally, and create a crack-up boom.

That’s why I’m reluctant to sell. Anyone who’s been around for similar booms, like 2000, should know how far this can go. We have plenty of room for this move to continue to run. Ultimately, tops usually feel great. Everything seems wonderful and it seems you just can’t lose, at the top.

I think it’s fair to say we’re not there, right now. Plenty are losing, whether it be crypto holders, Mag 7 owners, or a variety of other aggressive investors. Until we start to see something decisively crack, it’s hard for me to get too cautious. The potential gains are way higher than most think.

That said, we definitely have to pay attention. The latest focus, for me, is Japan, where they have an impossible trinity of supporting the yen and bonds, along with a desire to stimulate the economy. Can they do all that? I think it’s possible, at least for a while.

Japan is very much in focus right now, with a bond market that’s been going straight down. Based on rate check activity on Friday, it sure looks we stand a good chance of seeing coordinated action between Japan and the US to support the yen.

On the one hand, this would weaken the dollar, broadly supporting risk assets but would also drive the yen up, hitting the carry trade. Who wins? I would think it’s a net-support for stocks, but I guess we’ll see. We also have big tech stocks starting to report, this week. After months of going nowhere, can momentum reignite?

It’s certainly a very interesting, and somewhat scary, time. Until something breaks or gets too stretched, I can’t get negative. Events can definitely go wrong way up here but, as is often the case in these situations, potential rewards for being involved are also high.

Composite PMI was 52.8 vs. prev. 52.7, with Services stalling a bit.

European PMIs were mixed, with Germany doing well and France weak.

UK PMI was also strong.

Trump threatened 100% tariffs on Canada if they make a deal with China.

The US signaled the potential removal of a 25% tariff on India after their imports of Russian crude slowed sharply.

A US winter storm caused almost 12K flight cancellations and left about 900K without electricity.

China told companies they can prepare orders for NVDA chips.

The yen hit a two-month high against the dollar as chatter of central bank intervention rises.

The stronger yen hit the Nikkei, sending it down about -2.5%.

With the above, the dollar index (DXY) is hitting 4-year lows.

Silver topped $100/oz for the first time, while gold passed $5,000.

A Blackrock (BLK) private debt fund expects to mark down the value of its assets -19% after soured loans to e-commerce aggregators and home improvement. Not a huge deal, but there were already worries in the space.

The FT says the US is planning to invest $1.6B in USA Rare Earth (USAR) to develop key minerals supply, sending shares up 32%.

Durable Goods Orders, today.

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