How to Survive During Market Calm

SP500

Key zone: 6,800 - 6,850

Buy: 6,850 (on strong positive fundamentals); target 6,950-7,000; StopLoss 6,800

Sell: 6,750(after a confident breakout of the 6,800 level); target 6,600; StopLoss 6,800

The U.S. stock market once again shows a state of nervous equilibrium:

• S&P 500 +0.3%
• Nasdaq 100 +0.5%
• DJ 30 +0.2%

The main growth came from GOOGL, TSLA, and the semiconductor sector — except for NVIDIA, which slipped slightly.

However, behind this apparent calm lie alarming trends: rising funding costs and high repo rates are beginning to suppress speculative activity.

A similar situation last year triggered a 3.7% drop in the S&P 500 within just three weeks — and now the market is moving along the same slippery path.

The forward P/E ratio of the S&P 500 has exceeded 23 — the highest in the past 25 years. This amplifies fears that the market is overheated, especially amid the AI-stock rally, where investor enthusiasm increasingly resembles the dot-com bubble of the late 1990s.

Add to this the ongoing tariff-related lawsuits involving Trump, which deepen uncertainty, and the result is an extremely unstable backdrop.

Currently, the percentage of stock indices hitting all-time highs is the highest in 26 years — a painfully familiar signal for those who remember 1999 and the dot-com crash.

Today, TSLA shareholders are expected to vote on Elon Musk’s $1 trillion compensation package. The stock rose 4% yesterday and is trading near a local high. Investors are confident the “bonus” will be approved, while rumors of Musk’s possible departure are treated as speculative noise that doesn’t affect long-term expectations.

The situation in the U.S. money market looks far more concerning. On October 31, the Federal Reserve conducted a record liquidity injection into the banking system. Repo volumes between banks and the Fed continue to rise, signaling a systemic shortage of short-term funds.

The reason lies in the government shutdown, which has forced the U.S. Treasury to issue mostly short-term debt instruments to partially finance government operations. As a result, the department has effectively been “draining” short-term liquidity from the system. On November 3, the SOFR (Secured Overnight Financing Rate) jumped by 0.18%, marking the sharpest move since the start of the year.

The market received a clear signal: liquidity is tightening — which means the risk of correction in risk assets is rising.

Some analysts believe the Fed has moved into a phase of “fine-tuning” — an unofficial money-printing mechanism to stabilize the system during shutdown periods. Such measures temporarily smooth out problems but increase long-term overheating risks for the financial sector.

For now, the situation is viewed as short-term, and most market participants believe that once the government resumes operations, liquidity will return and stock indices will continue to rise.

The market is experiencing a calm with heightened turbulence beneath the surface. Politicians, with their tariff and budget wars, interfere with monetary flows, while leveraged speculators create an illusion of stability. If the Fed fails to maintain a balance between liquidity control and economic stimulus, the “calm” on markets could quickly end with a correction reminiscent of 2018 or 2022.

We’ll see.

So we act wisely and avoid unnecessary risks.

Profits to y’all!