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* FIEND'S SUPERBEAR MARKET REPORT *

* September 22, 2026 *

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* e-mail: fiendbear@fiendbear.com *

* web address: http://www.fiendbear.com *

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Fiend Commentary
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Ten Trillion Dollars at the Top

Wall Street had itself a party Monday.

The Nasdaq surged 2.3% to a record high.

The S&P 500 gained 1.5%.

The Dow added more than 350 points.

Bitcoin jumped more than 6%.

And the VIX slipped back below 15, closing at 14.87.

Fear apparently left the building.

At least if you looked at the indexes.

Look underneath them and the picture becomes considerably more interesting.

The Russell 2000, which represents smaller companies much more closely tied to the domestic economy, gained only about 0.5%.

That is certainly positive.

But when the Nasdaq is up more than four times as much on the same day, it tells us something about where the money is going.

It isn't flooding into everything.

It is being funneled into a comparatively small group of technology, semiconductor, AI and crypto favorites.

AMD jumped nearly 10%.

Intel gained more than 12%.

Meta surged more than 11%.

The semiconductor index climbed more than 4%.

Bitcoin ripped higher.

This wasn't exactly buy America.

It looked more like:

Buy whatever is working.

Ten Trillion Dollars in Two Stocks

Consider how distorted the major indexes have become.

Apple now carries a market capitalization near $5 trillion.

Nvidia is above $5.5 trillion.

Two companies.

More than $10 trillion of combined market value.

That number is almost difficult to comprehend.

Not because Apple and Nvidia aren't extraordinary businesses.

They are.

Apple generates enormous cash flow from one of the most valuable consumer ecosystems ever created.

Nvidia sits at the center of perhaps the largest technology spending boom since the birth of the internet.

The question isn't whether they are good companies.

The question is what happens when companies of that size become such enormous portions of the indexes investors use to judge the health of the stock market.

A 2% move in Nvidia now represents more than $100 billion of market capitalization.

Apple can add or lose a similar amount during an otherwise ordinary trading session.

A few giant stocks can therefore make the entire market appear much healthier—or much weaker—than the average stock underneath it.

That is increasingly what we are seeing.

The S&P 500 is again within striking distance of its record.

The Nasdaq has already made one.

Yet recent breadth data show that a surprisingly large percentage of S&P companies remain far below their individual highs.

One recent calculation found nearly 59% of S&P 500 stocks at least 20% below their respective peaks.

The index isn't in a bear market.

A large portion of its components apparently are.

That is quite a trick.

The Index Is Not the Market

This is one of the problems with capitalization-weighted indexes.

The bigger a company becomes, the greater its influence.

That works wonderfully when the giants keep rising.

Nvidia goes up.

The S&P rises.

Apple goes up.

The S&P rises.

Microsoft, Amazon, Meta and the other mega-caps join in.

The index looks terrific even while hundreds of smaller companies tread water or decline.

There is nothing fraudulent about the calculation.

That is simply how the index works.

But investors need to remember what they are actually looking at.

An S&P 500 record does not mean 500 companies are making records.

A Nasdaq record does not mean the average technology company is thriving.

And a VIX below 15 does not mean economic risk disappeared over the weekend.

It means option traders aren't currently paying much for protection against an S&P 500 decline.

Those are very different things.

The Small Guys Aren't Invited

Small stocks are particularly interesting.

The Russell 2000 did rise Monday, but its 0.5% advance was modest compared with the Nasdaq's 2.3%.

Small companies have several disadvantages in today's environment.

They generally borrow more expensively.

They have less ability to issue cheap bonds.

They don't have trillion-dollar balance sheets.

They often have less pricing power.

Their customers are more exposed to inflation.

And unlike Nvidia, they can't necessarily tell investors that artificial intelligence will transform their earnings five years from now.

A local manufacturer still has to buy diesel.

A restaurant still pays for food.

A trucking company still fills a tank.

A construction firm still finances equipment.

A small retailer still pays rent.

These aren't glamorous problems.

They are also where much of the economy actually lives.

Perhaps that helps explain why capital keeps migrating toward the largest companies.

When investors are uncertain about economic growth, inflation, interest rates and geopolitics, there is an understandable attraction to businesses with gigantic cash flows and dominant market positions.

The irony is that this defensive instinct can make the indexes look increasingly aggressive.

Money hides in trillion-dollar technology stocks.

Technology stocks rise.

The Nasdaq makes a record.

Everybody concludes risk appetite is booming.

Maybe.

Or maybe investors are simply crowding into the same lifeboat.

Bitcoin Joins the Party

Bitcoin offered another example Monday.

It surged more than 6%, reaching its highest level in roughly eight months.

Crypto-related shares followed.

This certainly looks like increasing risk appetite.

It may also reflect the same concentration psychology.

Investors aren't indiscriminately buying every speculative asset.

They are buying the biggest, most liquid and best-known ones.

Bitcoin increasingly occupies that position in crypto.

Nvidia occupies it in AI.

Apple occupies it in consumer technology.

Mega-cap stocks and Bitcoin aren't economically similar assets.

But psychologically they can serve a similar purpose during momentum-driven markets.

Everyone knows the name.

Everyone knows the story.

Everyone knows where the liquidity is.

And once the price starts moving, nobody wants to be the last one in.

That works beautifully until it doesn't.

Volatility Says Relax

The VIX closed Monday at 14.87.

That is another interesting development.

Only last week, bond yields were moving through 5%.

The Fed was preparing its first rate increase in years.

Oil was above $100.

The Middle East war was still producing attacks and supply disruptions.

Inflation remained at 3.4%.

Yet within a few trading sessions the market's primary fear gauge is back below 15.

Markets have short memories.

Perhaps that is one of their greatest strengths.

Perhaps occasionally it is a weakness.

Falling volatility can become self-reinforcing.

As volatility declines, systematic funds are often permitted to increase equity exposure.

Option hedges become cheaper.

Traders sell additional volatility.

That suppresses the VIX further.

Calm produces more calm.

Until something changes.

This doesn't mean a VIX at 15 is forecasting a crash.

It means investors currently see very little reason to pay for protection.

Given everything else going on, that is at least worth noticing.

Meanwhile, at the Gas Station

There is another market that isn't nearly as cheerful.

California's average gasoline price has moved above $6.15 a gallon.

Diesel is above $8.40.

Not approaching eight.

Above it.

California diesel recently set another record.

Nationally, diesel has climbed above $6.50 a gallon, also a record.

A year ago it was around $3.70.

That is a remarkable increase in one of the most economically important commodities in the country.

Diesel isn't merely another fuel.

It moves things.

Trucks.

Trains.

Farm equipment.

Construction equipment.

Generators.

Ships.

The consumer sees gasoline prices every time he pulls into a station.

Diesel inflation is more insidious.

It hides inside almost everything else.

The Quiet Tax

That may explain why the economic damage from this year's fuel shock hasn't yet appeared as dramatically as one might expect.

Energy prices move quickly.

The economy absorbs them slowly.

A trucking company doesn't necessarily raise every freight rate the morning diesel jumps ten cents.

Existing contracts remain in place.

Fuel surcharges adjust with delays.

Retailers initially absorb some transportation costs.

Manufacturers run through existing inventories.

Farmers continue planting and harvesting because they don't have another choice.

Eventually somebody pays.

Reuters estimates that higher diesel prices account for roughly $51 billion of the $112 billion increase in U.S. fuel spending since the latest energy shock began.

That is nearly half of the additional burden from one fuel most households never directly purchase.

Diesel prices are up roughly 76% over the past year.

Refineries are running near capacity.

There isn't much spare refining capability available to magically produce another million barrels of diesel tomorrow.

That means the problem can't necessarily be solved simply because crude oil drops $3 on a Monday.

Oil eased toward $100 yesterday.

Wonderful.

The consumer is still paying $6 gasoline in California.

The trucker is still paying more than $8 for diesel.

Those prices have already entered the pipeline.

Where Is the Damage?

This is where the next few months become interesting.

So far, economic data have held up remarkably well.

Retail sales were strong.

Employment remains relatively firm.

Corporate profits are still supporting equity valuations.

The consumer hasn't collapsed.

Perhaps households and businesses will simply absorb the higher energy costs.

The American economy is enormous and surprisingly resilient.

But costs don't disappear merely because they haven't shown up in GDP yet.

Someone eventually eats the increase.

The trucking company accepts lower margins.

The retailer raises prices.

The manufacturer charges more.

The farmer passes costs through to food processors.

Consumers cut spending somewhere else.

Or businesses postpone expansion.

The first stage of an energy shock is the price increase.

The second is figuring out who gets stuck with the bill.

We may still be in that process.

Inflation Has a Lag Too

This is also why the next inflation reports matter so much.

August CPI showed headline inflation at 3.4%.

But much of the latest energy surge occurred too late to be fully reflected in that report.

The next employment report arrives October 2.

September CPI follows October 14.

Those are the big ones.

If employment remains firm and inflation moves higher, Warsh's decision becomes considerably more difficult.

If inflation moderates and employment weakens, he gets his excuse to pause.

WUCO would probably welcome that outcome.

The market currently seems to expect it.

Despite last week's Fed hike and hawkish talk from several officials, investors remain uncertain about another move in October.

Wall Street is behaving as though September may have been enough for now.

Stocks are surging.

Technology is making records.

Bitcoin is ripping.

Volatility is below 15.

That isn't exactly the market reaction one would expect if investors believed an aggressive tightening cycle had just begun.

The Fed Says More May Be Needed

Interestingly, some Fed officials aren't nearly as relaxed.

St. Louis Fed President Alberto Musalem said Monday that additional hikes are probably necessary and argued that acting incrementally before inflation becomes more entrenched could prevent the need for much more disruptive action later.

That is almost exactly the opposite of the WUCO thesis we discussed yesterday.

Preventative versus reactive.

Musalem appears to favor preventative action.

Our suspicion remains that Warsh will require more convincing.

The next jobs and inflation reports may settle the argument.

If CPI climbs toward 4%, another hike becomes much harder to avoid.

If employment remains strong at the same time, the Fed loses its best excuse for waiting.

But if either report gives Warsh enough ambiguity?

WUCO probably takes the day off.

A Strange Kind of Risk-On

Monday therefore produced a peculiar picture.

The Nasdaq made a record.

Bitcoin surged.

AMD became a $1 trillion company.

Nvidia is worth more than $5 trillion.

Apple is worth nearly $5 trillion.

The VIX is below 15.

And the Russell 2000 barely participated compared with technology.

Meanwhile:

Gasoline in California is above $6.

Diesel is above $8.

National diesel prices are at record highs.

Inflation remains above target.

The 10-year Treasury is still close to 5%.

The Fed just raised rates.

And another hike remains a coin toss.

Perhaps markets are correctly looking through all of this.

Oil fell Monday.

Bond yields fell.

The economy remains strong.

AI spending continues at extraordinary levels.

Corporate earnings remain healthy.

Those are legitimate reasons for optimism.

But the narrowing underneath the averages makes the optimism less comfortable.

Everybody Is Crowding Into the Same Trade

Market concentration doesn't tell us when a rally ends.

Narrow markets can get narrower.

Expensive stocks can get more expensive.

Nvidia could go to $6 trillion.

Apple could join it.

Bitcoin could continue higher.

Momentum has no obligation to stop simply because valuations become difficult to comprehend.

The danger comes from dependency.

When an index depends increasingly on a small number of enormous companies, those companies have to keep delivering.

Every quarter.

Every forecast.

Every product cycle.

Every AI spending announcement.

There is less room for disappointment because so much market value rests on the same handful of assumptions.

Monday's rally looked spectacular on television.

It was spectacular.

But look a little farther down the capitalization rankings and the party was much quieter.

That is what we will be watching.

Not whether the Nasdaq can make another record.

Whether the rest of the market eventually joins it.

A healthy bull market usually spreads wealth around.

This one increasingly seems determined to pile it all in the same few places.

Two companies are now worth more than $10 trillion.

Bitcoin is surging.

The VIX says there is almost nothing to worry about.

And the guy buying diesel in California is paying more than eight bucks a gallon.

One of these markets may be seeing the future more clearly than the others.

We just don't know which one yet.

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