Benjamin Cowen argues that U.S. stocks are still following the typical midterm-year pattern: the S&P 500 has already broken to new all-time highs at 7750, but the more important correction is still likely ahead, with August to September the key window and the effect potentially lasting into October, November, or December. He repeatedly ties that setup to past midterm years in 2014, 2018, and 2022, saying the next Fed meeting on September 16 and higher bond yields could help trigger a deeper second-half correction. His practical message is to keep buying low-cost index funds, not try to time exact tops, and to watch the S&P, the 10-year and 30-year yields, the dollar, and Bitcoin’s cycle bottom as the next moves develop.
Benjamin Cowen says the S&P 500 hit new all-time highs again and is now at 7750.
He says the current S&P action still looks very much like how many midterm years play out, with new highs often continuing into August and sometimes September.
He says he has been expecting new all-time highs into the August timeframe, and that the move could extend into September.
In prior midterm years, he says corrections generally started in September or later in the August-September window.
He cites 2014 as a case where the S&P correction started on September 19 and was about a 10% drop.
He cites 2018 as a case where the S&P correction started on September 21 and then had a lower high on October 3.
He cites 2022 as the outlier in a bear market: the top came on August 16, there was a lower high on September 12, and the market bottomed around mid-October.
Across those three midterm years, he says the stock market fell about 10% in 2014, about 20% in 2018, and around 20% in 2022.
He says the only time the S&P was not really making new highs at this point in a midterm year was 2022, when the market was already in a bear market.
He says the market breakout now looks really similar to prior midterm years, and if the market had already been correcting in late July that would have been much less consistent with the historical pattern.
He says the next Fed meeting is September 16, with current odds around 57% for a rate hike and 43% for no action.
He thinks a correction could start around that Fed meeting, and if the Fed raises rates in September people may worry the easing cycle is over and a hiking cycle is resuming.
He says that if the Fed does not raise rates in September, the long end of the yield curve is likely to go higher; the 10-year yield is at 4.6%, the 30-year yield has already broken above its October 2023 level, and he thinks the 10-year will likely get there too.
He says the correction could more likely start in September than October, but that would only mark the start, not the end; in his view it could run into October, November, or even December.
He says the correction matters to him mainly because he uses the S&P to infer when Bitcoin's market-cycle bottom could happen, and he thinks Bitcoin's bottom normally comes during the stock-market correction in the back half of the year.
He says in 2022, 2018, and 2014 Bitcoin did not bottom on the first stock-market correction but on the second, deeper correction; he thinks 2026 may be repeating that same structure.
He says the S&P could eventually revisit 6,000, and if it did that would likely be a brutal correction that would very likely cause Bitcoin to lose its 60K support.
He says the dollar has been down recently but is likely just forming a higher low and should head back up later in the year, which could become another headwind for risk assets.
He says his strategy remains to buy low-expense-ratio index funds, keep buying monthly, and use corrections as opportunities to buy rather than sell.
He says the video's basic message is that the short-term bullish breakout can keep going for a few more weeks, but the more important midterm-year correction likely has not started yet.
He also says the S&P may not change course until at least mid-August and maybe not until mid-September if it tracks 2014 or 2018.
He promotes the Investing Through the Cycles conference in Miami this November and says viewers should get a ticket through the links in the description or pinned comment.