SPY slips into Stage 3 distribution, big money may be quietly selling before a deeper slide

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In Stan Weinstein’s stage analysis, Stage 3 (distribution) is when a stock’s uptrend peaks and flattens, with prices oscillating around a leveling 30-week moving average. It signals potential selling by big investors, often preceding a downtrend (Stage 4). For $SPY, this suggests the S&P 500 might be topping out—based on the chart’s recent action.

“FOMC Minutes explicitly state high valuations, Mag 7 concentration, off-balance sheet funding, K-shaped economy and hedge funds piling into basis trades:

In their discussion of financial stability, several participants commented on high asset valuations and historically low credit spreads.

Some participants discussed potential vulnerabilities associated with recent developments in the AI sector, including elevated equity market valuations, high concentration of market values and activities in a small number of firms, and increased debt financing.

A few participants commented that the financing of the AI-related infrastructure buildout in opaque private markets warranted monitoring.

Several participants highlighted vulnerabilities associated with the private credit sector and its provision of credit to riskier borrowers, including risks related to interconnections with other types of nonbank financial institutions, such as insurance companies, and banks’ exposure to this sector.

Several participants commented on risks associated with hedge funds, including their growing footprint in Treasury and equity markets, rising leverage, and continued expansion of relative value trades that could make the Treasury market more vulnerable to shocks.

A couple of participants commented that although consumer credit quality remained solid in the aggregate, there were signs of weakness in the financial positions of low- and medium-income households.

A few participants noted the need to monitor potential spillovers from volatility in global bond markets and foreign exchange.”