Are The Cracks Starting To Show In The Market?

DANO WEIR: Happy Friday, July 17th, 2026. I'm Dan O'Weir from Sonoma Wealth, Fermata Advisors, and we're about to go On The Markets. The graphics a little ominous.

DANO WEIR: It is a beautiful day in Sonoma County. It's a July summer day. We are a cheery bunch here, but the market, we are starting to ask the question, are the cracks starting to show in the market? A chip pullback, a double bottom fail. Is there AI fatigue? We're asking that question this week. Also looking at some tariffs now being refunded due to judicial rulings.

DANO WEIR: What, if any, impact could that have on the market? We'll look at the most crowded trade in the world and why you're likely already in it. Bitcoin showing some signs of life after a difficult 2026 so far. And gold continues to fall back to Earth. What near-term prospects could look like? Fire it up.

SPEAKER 2: The stock market, the economy, your money. What's the latest and what could be next? Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On The Markets starts now.

DANO WEIR: As I said, I'm Dan O'Weir, the marketing director, joined by managing principal Chris Sipes. Darren Blonsky on assignment off this week. He will return next week. Chris, you do not have a meme this week, so I'm providing the meme.

DANO WEIR: I was out last week because I was in the happiest place on Earth, Earth Disneyland. And I found out an amazing fact. One thing you don't think about with Disneyland is that they do a firework show. Seems pretty normal. Chris, they do a firework show every night, 365 days a year.

DANO WEIR: And now that I have my finance brain, I'm like, what do those numbers look like? They spend $50 million a year as a company on fireworks. They are the largest commercial purchaser of explosives in the world.

DANO WEIR: They are second. Only to the United States military.

CHRIS SIPES CFP®: Wow. That's a great fact. I love fireworks, by the way. I know they annoy a lot of people and some people.

DANO WEIR: You know, it's not their thing. I look forward to them every year. So maybe when I retire, I should get a job at Disney. We had a rough 4th of July show here in Petaluma. Because they don't really do a true show anymore. It's supposed to be this citywide thing and you can never see it.

DANO WEIR: And so my son was really disappointed. He's like, I really wanted to see the fireworks. I said, buddy, next week, we're going to see the real fireworks. So yeah, so that was a fun trip. It's great to be back. Let's dive into the market. Now let's look at our CPI, Chris.

CHRIS SIPES CFP®: Yeah. So we got an updated CPI number that came in better than expected. Now we haven't heard that in a while. So that was some welcome good news to the market. The Consumer Price Index comes out every month. And so we just got that updated amount. Now, this is showing the CPI over the long term going back to the 40s. And so you can kind of see it on the grander scheme of things.

CHRIS SIPES CFP®: We've had that little blip and then we've kind of fish hooked down. So hopefully that's a sign of things to come. The new president of the Fed has said that this is top priority number one for the Fed coming in. So we'll see if that's going to be the follow through, that they are going to fight inflation as he says they are. But the markets seem to believe it.

CHRIS SIPES CFP®: It seems that the market is baking in tighter financial conditions, higher interest rates. We saw a little bit of a sell-off this week related to that. If the Fed is really going to be hawkish, that will affect markets. Now, another thing that Warsh is communicating is that they won't be communicating as much.

CHRIS SIPES CFP®: So there's going to be less on the forward guidance and they're going to say less. And so it's going to be up to the market to kind of decipher and read the tea leaves on what's happening because there's a new regime in town and they are going to be less communicative. Now, the title of the show this week is, you know, Crack Starting to Show.

CHRIS SIPES CFP®: And I think that it's important for investors, long-term investors, to look at that not with fear, but hopefully with the peace of mind of two things. One, you either know you've got your plan in place and you're expecting pullbacks in the market. That's part of the game. If you didn't get pullbacks, you wouldn't get any returns. You know, if you're not taking risk, you're not getting paid to take risk.

CHRIS SIPES CFP®: And so for those that have plans and they know, look, there's going to be pullbacks. Some of them are going to be big. Some are going to be small. It's all part of the game. And I expect them. I just don't know when they're going to happen. Fine. Or two, if you're someone who's in accumulation phase, when the market pulls back, that's a good thing for you because you get to buy more shares for the same price.

CHRIS SIPES CFP®: And so it's not necessarily always a bad thing. It shouldn't be, hopefully, when the market pulls back. I know it doesn't feel that way when you're in it. And look, we're like 1% off the highs or something, so this is definitely not. Bear market territory, although we've seen a little bit of that in some of the tech stocks.

CHRIS SIPES CFP®: But I just think it's constructive to keep that in mind that hopefully this is not, you know, something that's unexpected or scary when you do see a little volatility in the markets.

DANO WEIR: And I'll shout out one of our graphic designers, Miriam, who I work with on this thumbnail image. And if you can, for this episode, and that's very specific, what we chose there, which is that you can see a little bit of a crack.

DANO WEIR: And then there's also circuit boards on top of that concrete there, or that, you know, that hard material. And that's on purpose, meaning are in this era where space SpaceX is not profitable, but is IPOing, you know, and it just got a quote, go to the moon, which did not happen.

DANO WEIR: Are we just going to continue to live in a world where there's no fundamentals? Or is that finally starting to crack a little bit, finally starting to come back to Earth? This AI euphoria, is that starting to maybe show some signs that, you know, you can't completely blow out your CapEx on borrowed money and still have the price just go up and to the right?

DANO WEIR: I think that's generally what you're saying. And if you're a diversified investor, that may be what you want, because you've perhaps not been seeing the returns you would hope because everybody's over here. Buying companies that aren't making money.

CHRIS SIPES CFP®: Yeah, I think one of the characteristics of the markets really since just before COVID, and we'll see if this continues, but it seems like everything just happens faster now, Dan. And there's more of a expectation of instant gratification either way. And with the semiconductors, they have done extremely well since the tariff bottom in April of 25.

CHRIS SIPES CFP®: And they, they even super accelerated that in April 26, which in today's, today's market, you know, a few months is a long time. And, and, and now we're starting to see weakness. So the characteristic of, you know, going straight up, it can also go straight down and you got to kind of be ready for that if you're investing that way.

CHRIS SIPES CFP®: Which of course we, we don't advocate for, but, But I think you are seeing that in the market and it's faster moves driven by fewer companies and fewer sectors today as the hot money kind of moves around.

CHRIS SIPES CFP®: So back to CPI though, this was a little graphic made by Mike Zaccardi and it shows that the core CPI was down month over month for only the seventh time since 1985. I was really... Surprised by that. And here you can see an illustrated bell curve, basically, of how many times it's been within these different ranges. And so surprises to the downside are extremely low in terms of the total count.

CHRIS SIPES CFP®: To the upside too, thankfully, if you take a look at that right tail all the way down there, there's only been 10 times it's been over 0.6. Month over month, thankfully. But I think it was Buffett that said something along the lines of there's only two things you can count on in the financial world.

CHRIS SIPES CFP®: And one is taxes and the other one is inflation. And I think in today's world, we have to be cognizant of the potential for inflation and how that could impact our portfolios and our lives. And so the CPI numbers are very big as they come out. Each month. And it was a welcome sign of relief to see that down this month.

DANO WEIR: Darren is out this week, so I can make a second Disneyland reference without him losing his mind.

DANO WEIR: For my trip, because I'm a dork, I actually bought a vintage Star Tours hat because I found it on EBay and it's amazing looking. It's beautiful. And so I bought that. And when I took it out of the box, it still had the original 1987 price tag on it.

CHRIS SIPES CFP®: Nice.

DANO WEIR: That hat was $9.50. And they happen to be selling a new updated version of the same hat in the gift store, The Ride, now. And it was $29. So what a perfect example, what a perfect example of inflation. And honestly, that actually might've been a pretty low inflation rate for something like that.

CHRIS SIPES CFP®: That, yeah, I was going to say that sounds actually kind of cheap. I was in a coffee shop the other day and like looked at a hat and I was like, Oh, that's kind of cool. I don't know how much it was. And it was like 45 bucks. And I was like, Whoa, no thanks. Anyway, That's a perfect illustration though, Dan, of like...

CHRIS SIPES CFP®: Hey, just stuffing the money into a savings account or under the mattress, putting it not at risk, it's going to be difficult, very difficult to keep up with the cost of living over time. And your buying power goes down. And that's a perfect illustration. Buying power is just how much can you buy for that dollar that you've got, right?

CHRIS SIPES CFP®: And so whether it's hats, suits, food. Homes, whatever it is, they kind of tend to move in that same direction, which is, you know, they get more expensive over time for the most part. Now, one reason, possible reason for the, you know, backing off of the relentless inflation that we've been witnessing is the tariffs apparently getting paid back in June.

CHRIS SIPES CFP®: I don't know about you, Dan, but I did not see a check for that. It must have gone somewhere else or be in the mail. But Andreas Steno-Larsen had a good quote here on Charlie Biello's chart, which was that everybody screamed inflation when tariffs were coming in.

CHRIS SIPES CFP®: What about now when they're paid back? And you can see those customs duties, monthly receipts from Charlie Biello here. And the increase that we saw with the tariffs coming on and then the big reversal for the month of June. So, you know, I don't think tariffs are explicitly calculated into the CPI.

CHRIS SIPES CFP®: Pretty sure that's the case. However, you would think there's got to be some tangential impact on the prices taking that into account. So we'll have to keep an eye on it next month, right? Is it a factor of... Tariffs, kind of a one-time impact from tariffs?

CHRIS SIPES CFP®: Is it the war cooling down? Or at least at that time, it was in a cool-down phase. I think we're heating back up now. Kind of lost track of that, where we're at with that. But something impacted CPI last month in a positive way.

DANO WEIR: And when it comes to the tariffs, just something to consider. I'm talking pure numbers here. And this is also of my recollection.

DANO WEIR: From the interview, but I was listening to an interview with RFK and he was mentioning that Europe pays dramatically lower, I'm paraphrasing here, but they pay dramatically lower prescription drug prices and that American pharma companies see America as their place to basically overcharge. And then they charge what would be like normal or below market rates to the rest of the world.

DANO WEIR: And Trump used tariffs to help in some cases and with some drugs. Balance that out somewhat. Again, consider the source. So if that's true, it almost doesn't matter if tariffs, if these tariffs end up getting refunded, because there is a potential that it was never about the actual revenue from the tariffs and more about a negotiating tool that he had to try to get other prices down.

DANO WEIR: So if you were to try to look at what he's doing and what he's done from a positive light or from a constructive light. That is a potential strategy there.

CHRIS SIPES CFP®: Yeah. And we'll take a closer look at imports and exports later on.

CHRIS SIPES CFP®: But speaking of the semiconductors, right, this was from Bank Of America. And they had the long global semiconductors, long meaning that you're hoping the price, you own it, and you're hoping that the price is obviously going to go up because you own it.

CHRIS SIPES CFP®: Long global semiconductors is the most crowded trade ever in the history of the fund manager survey at 82%, meaning that, you know, when they surveyed the fund managers, so those that are putting money to work in funds.

CHRIS SIPES CFP®: Long semiconductors was what they say overcrowded meaning that basically that was the consensus trade everybody was in it and it's easy to see why i was going straight up for a while you know and so now look at some of the others there though there's nothing really even close even the mag 7 which was you know just a few years ago Probably the most crowded trade.

CHRIS SIPES CFP®: I feel like when the other times we've looked at this chart, that one was definitely a popular one. The other ones basically aren't even registering though. So that was the concentration for the fund managers.

DANO WEIR: For most, can you define for someone, what do they mean by most crowded trade?

CHRIS SIPES CFP®: Meaning when you, when you ask these fund managers, like what assets are you long or like what? What trades do you think are good trades right now? And they were saying, like as an opposite, short Europe equities, that's your betting that the European stock market values are going to go down. So do you say that's a trade you think is going to work out right now?

CHRIS SIPES CFP®: Basically, nobody was saying that. I think in July, it says 3% according to this. But before that, it was really not even registering. Now, long semiconductors, like 82% of the fund people that they surveyed, so eight out of 10, were saying, yeah, I'm long semiconductors. And so crowded, meaning that basically everybody was piling into that as a quote unquote good idea.

CHRIS SIPES CFP®: Okay, now sentiment. We got an uptick in bullish sentiment. With the memos of understanding and some of the good news that we were hoping for in this last Thursday's AAII readings. We got a jump in the bullishness to almost 45%. Now, really, you don't start kind of raising an eyebrow until it's north of 50, but it's still higher than the average neutral rate, which is right around a third.

CHRIS SIPES CFP®: Bearishness dropped we've got the cnn fear and greed index at 40 which is a drop to fear versus 46 neutral and you'll remember that that is actual positioning so it's based on seven different positioning factors so how are people actually invested not what do they say and then we've got the Bitcoin fear and greed index all the way up to 27 which is just fear Dan which is higher than 23 extreme fear last week and we were in the low single digits not too long ago so which that correlates with our our our next chart here from nate garaci and he says that a spot Bitcoin etfs finally he puts in you know he accentuates that finally snapped a weekly outflow streak so outflows are like when people are putting money into a fund versus when they're taking money out.

CHRIS SIPES CFP®: They can track that. So they can track the dollars that are going into certain ETFs and mutual funds. And so they finally snapped their outflows. You can see that really since what, maybe like the end of April, there's been outflows in the Bitcoin funds. So he says over 8 billion exited during the past eight weeks.

CHRIS SIPES CFP®: Easily the worst stretch since the products launched in January of 24. Bitcoin down about 20% during this period. So we finally broke that area. And those that follow Bitcoin technically know that it's kind of reaching some turning points, which we'll see in a second towards the end of the show. But it's kind of got to make a decision which direction it's going, you would think.

CHRIS SIPES CFP®: It's been sideways here for a little while. So consumer sentiment, we got a good, consumer sentiment update today from the university of Michigan survey, another bounce off the bottom there, which is good news. We're up to 54 on this particular survey and you can see we're still very low compared to historical averages for this reading.

CHRIS SIPES CFP®: People, people really tend to get upset about inflation and So that might be driving part of it. I don't know. I'm sure there's a myriad of factors that kind of go into how people feel about the way things are from a consumer standpoint. But we did get an upturn there, which is a positive thing.

CHRIS SIPES CFP®: Now, going back to Fed Chair Warsh and the direction of the Fed, which at the moment feels a little more hawkish than I think what the market expected. Definitely at the beginning of the year. Look, we came into the beginning of the year. You had Trump really all over Chairman Powell to lower rates.

CHRIS SIPES CFP®: Everyone expected him to bring in a new chair that was going to lower rates according to his wishes, fighting for looser monetary conditions and lower interest rates. So we started the year with an expectation of three rate cuts this year, and that has been eliminated. And now to the point where we're at a 50-50, roughly a 50-50 chance of a hike.

CHRIS SIPES CFP®: And those chances were actually a much higher before getting that softer inflation reading that we got.

CHRIS SIPES CFP®: So those expectations dropped dramatically when we got that lower inflation. But right now the market's saying like, look, either the interest rates are going to be about unchanged or they're going up by the end of the year. So a big switch in the expectations. Of course, with the war starting in March, end of February has had a big impact on it and had this big impact on the expectations of inflation.

DANO WEIR: Why is the gold price and the potential for hikes so correlated here?

CHRIS SIPES CFP®: Well, I think there's a lot of reasons, but I would say one of them is going back to your hat example. How much can you buy for a dollar? There's a saying, and I don't remember the exact. Let me think about it for a second. Okay.

CHRIS SIPES CFP®: I believe it goes that it's one ounce of gold will buy a nice suit in pretty much any time period you go back to. So you go back to like the 1850s. You have an ounce of gold. You're probably going to get a nice suit. Now, gold is trading in the. Close to 4,000. I've never spent that much on a suit, Dan. Never, never, ever.

CHRIS SIPES CFP®: I guess maybe my weight fluctuates too much to make that commitment. But anyway, they say that an ounce of gold will buy you a nice suit in pretty much any timeframe, right? So If the Fed's going to get looser, if they're going to loosen monetary policy, there's going to be more money in the system, the inflation is going to be going up, and that price of gold is going to go up because that suit's going to be more expensive.

CHRIS SIPES CFP®: Now, the vice versa of that is that the Fed's tightening and they're tightening their monetary conditions. That price of gold, they say gold is actual money. It's like actually tracking the value of money.

CHRIS SIPES CFP®: And so if they're contracting, the Fed is contracting the monetary base and the money conditions, then you're going to need less gold to buy that suit. They're going to have to sell that suit at a lower price to be able to sell it. So what you see here is the market pricing of a Fed hike. Meaning, you know, that's inverted.

CHRIS SIPES CFP®: So basically the expectations that the Fed is going to hike have been going up. So this chart is showing that inverted and then the price of gold. And so the expectations, gold is just following the expectations that the market has right now for the Fed and what the monetary policy is going to be doing.

CHRIS SIPES CFP®: Now, along with that, we have from... Bob Elliott showing the 30-year TIPS yield. Now, TIPS are Treasury Inflation Protected Securities, meaning that it's a bond issued by the U.S. Government that has an inflation protection aspect to it. So they will adjust it with CPI.

CHRIS SIPES CFP®: And so... They call this the real yield because you're protected from inflation, you know, in theory, because as long as you say inflation is measured by the CPI. Then your dollars are going to be protected from, loss of purchasing power by buying a tip.

CHRIS SIPES CFP®: And so real yields are going up. So the, the, when real yields go up, that tends to be a headwind for gold as well. Because you can hide in the safety of gold or you can hide in the safety of a, a tip. That is going to pay you a cash flow, right?

CHRIS SIPES CFP®: So this, this Treasury bond is going to pay you a cash flow. Unlike gold, gold does not pay cash. It's just the spot price. So the higher those real rates go, typically the lower gold goes, because people have a better alternative to put their money in for that type of safety.

CHRIS SIPES CFP®: Where are we with expectations on inflation? Well, the import prices, you can see import prices over a long period of time. This is a fairly noisy series of data, but this is year over year import prices. And you can see where we're at today relative to history.

CHRIS SIPES CFP®: Really, the only thing that we have to compare it to in modern times would be the COVID spike. So this is imports, so things that we are buying from outside the U.S. A lot of things would fall under that category.

CHRIS SIPES CFP®: And then if you look at export prices, also heading up. Now those export prices really, other than briefly in the 80s, the only other time again is during the COVID spike in prices.

CHRIS SIPES CFP®: Now, we did get a curl over on that. Look at the little curl over on the export prices. So maybe we've seen the peak there, hopefully. But important export prices are both elevated and seem to have been going up here recently. So those are big inputs to the CPI, the inflation rates.

CHRIS SIPES CFP®: And inflation matters ultimately for many reasons. But from a financial standpoint, it's got a huge impact on interest rates because people that buy bonds as an investment, they want to make more than inflation. And so in order to do that, they've got to get a higher rate of return than they think inflation is going to be.

CHRIS SIPES CFP®: And then for people that are borrowing money, of course, it's pretty obvious the higher. The, the interest rate goes, it makes it more difficult to afford things. And, and, and so some things pencil out at higher interest rates and some don't in terms of business, investments and, and, you know, even, even just borrowing money to, buy a house or things like that. So, so inflation has a huge impact on the price of money.

CHRIS SIPES CFP®: And, And. And then here we have also updated this week was from the National Association Of Home Builders, Wells Fargo, U.S. Housing Market Index. That is still pretty much in the doldrums. Now, that's important for inflation because homes make up or the price of shelter makes up a little over 30% of the CPI.

CHRIS SIPES CFP®: And they don't measure it off of this particular... Index. But what this is kind of showing is like an index of the overall housing market, which is still struggling and has been struggling for quite a while, even though the prices have remained elevated while that struggle has happened. So it's been kind of a weird, kind of a weird struggling market.

CHRIS SIPES CFP®: Usually when markets struggle, prices go down. It hasn't happened quite as much with this particular market situation.

DANO WEIR: Now, Chris, I'm pretty convinced that they're just flipping a coin in the Strait Of Hormuz, whether it's open or closed. So how has that affected oil?

CHRIS SIPES CFP®: Well, here you can see, again, another long-term chart of the crude oil spot price. We're at a little over $80 as of today. I didn't check it before we got on. Let's see here. Ooh, went up more since this chart was put in this morning. We're at $87. 77, according to Koi Fin on Brent Crude.

CHRIS SIPES CFP®: So it's been noisy. Now, this doesn't have as much of a direct impact on CPI because they, often look at X food and energy because food and energy are, are more volatile. But I think when you look at it from a consumer standpoint, like all of us are filling our vehicles, all of us are using oil every day to, you know, provide energy and, you know, many, many of our products are, are.

CHRIS SIPES CFP®: Products of oil in some way or another. So the price of oil is very important for the economy, or at least it has been. Listening to a lot of these oil experts talk about, hey, why didn't it have a bigger impact so far with this straight of war news?

CHRIS SIPES CFP®: I don't know. I think there's a few factors. One, we came into it with a lot of inventory, apparently, much higher than normal inventory. And so we kind of had a glut of oil coming into this. So that helped. Two, China has made a lot of changes to their oil markets.

CHRIS SIPES CFP®: Basically, they had a lot hoarded and they were able to kind of turn off how much they were taking in, which also had a big impact on it. So we'll see how long this can continue though, because it just does seem like at some point you would think this has got to have an impact On The Markets.

CHRIS SIPES CFP®: I don't know, hasn't, hasn't really so far, but.

DANO WEIR: I don't have it handy, but Chris, I saw a chart showing the amount of oil that we're getting from Venezuela post Maduro, has just exploded and China has been ground to a halt from Venezuela.

DANO WEIR: So, always kind of wonder about the accuracy of some of those claims, but, that could be, you know, a case where we're now. Leaning on that. Some might even say that that was done on purpose, in advance of this. But it appears that we're using Venezuela more than we're needing Iran.

CHRIS SIPES CFP®: That could be a two. Yeah. Don't pretend to be an expert in the area. And it does seem baffling, you know, this is, from, chai girl on, on Twitter. She's an oil analyst and She's showing, this is via Bloomberg, tanker vessels crossing as of July 17th, which is today. So she posted this this morning. And you can see that huge drop off of what was kind of normal. Looks to be in the 60 to 80 range.

CHRIS SIPES CFP®: And as of this chart, it was at three. So, but who knows? How's Bloomberg tracking this? I'm sure there's black market stuff getting out otherwise. I'm sure there's all kinds of funky stuff happening. But at least according to the official data out of the Bloomberg, there's not much oil moving through there. And it's a significant portion of the global oil supply, not to mention fertilizers and other such things.

CHRIS SIPES CFP®: From a market's perspective, it seems like at least up until this week, the market just didn't really care and has not been pricing in much of a change from this. So I don't know that that's the market knowing something that we just can't see, probably. Or if it's a situation like, remember how the market responded to COVID, where COVID was kind of like, there was a lot of stories of it spreading everywhere.

CHRIS SIPES CFP®: It seemed like the market just discovered it all of a sudden and then sold off and ran for the hills immediately. So is this another one of those functions of markets just moving faster these days and we're all going to kind of wake up and go, oh my gosh, there's no oil, sell everything. I don't know.

CHRIS SIPES CFP®: But for the moment, it seems like the market's been pretty copacetic about it.

DANO WEIR: Darren returning next week, so no candlesticks this week, but let's take a look at the S&P 500, Chris.

CHRIS SIPES CFP®: Yeah, so these are, we're just kind of using some common ETFs. Of course, we do not, this is not a recommendation for anybody. What we're trying to capture here are, you know, the overall asset class essentially. And so these are some common index tracking ETFs. That just try to capture what's happening in that asset class.

CHRIS SIPES CFP®: It's not a recommendation to use these funds or anything like that. And so we've got the S&P here as represented by the SPY. Now, this is a market cap weighted index, meaning that NVIDIA is going to get much more of the investment allocated to it than, say, Altria. Or ExxonMobil. And so market cap has been outperforming up until really recently.

CHRIS SIPES CFP®: And this week we had some crazy moves in the equal weighted index versus the market cap weighted index. So I don't know if that's a sign of some sort of regime change, but many days this week where the equal weight would be up while the market weight... Cap weight was down. And there's a big spread between them. Usually they're somewhat close to one another.

CHRIS SIPES CFP®: Also, the spread between value and quality versus growth and speculation, essentially. Huge spread this week. So we'll see if that's a sign. But we've got two lines here, which is the 50-day moving average in gray, and then the 200-day moving average in green. These are meant to show you kind of more of a smoothed out price factor over time to just kind of give you an idea what the direction is.

CHRIS SIPES CFP®: And you can see here, not much to worry about if you're looking at the moving averages of the S&P. A lot of strength there up into the right. Same kind of deal with with the let's see here oh did i put S&P in there twice sorry meant to put in the Qs. But the Qs are very similar. Sorry, duplicated the S&P chart. But Qs are very similar.

CHRIS SIPES CFP®: But one thing to note is that both the S&P and the Qs did dip below their 50-day moving averages as of the close today. And the Qs more so. There's quite the fall off in that 50 moving average. The S&Ps is barely underneath it, but the Qs have a more drastic drop-off. So we'll see if that's a dip buying opportunity or if that's just the start of something bigger.

DANO WEIR: And that's kind of the thesis of today's episode too, the cracks starting to show. Is this just kind of typical kind of a summer lull or is this perhaps signs of weakness?

CHRIS SIPES CFP®: Yeah. So you Sorry, Dan, I blew it. The one chart that showed the cracks included this week. Apologies.

DANO WEIR: No, it gives me a reason to be on the episode. Otherwise, I'm pointless, Chris.

CHRIS SIPES CFP®: That's what I'm here for. Lack of cracks in the momentum of the small US companies. This is represented by IWM. And you can see here, comfortably above the 50-day moving average, up and to the right, we've seen a lot of strength in the... In the small companies this year.

CHRIS SIPES CFP®: For once, knock on wood, they've been outperforming the large companies. And so that strength has continued. And it's interesting to see that, but no signs of cracks or vulnerability yet in the IWM, the small stocks. We look at the developed markets as represented by IFA.

CHRIS SIPES CFP®: Pretty pretty strong there as well. Flirting with that 50-day moving average, really chopping up that 50-day moving average over the last month or so, but nonetheless, up into the right with those trend lines and still continuing to see strength from the foreign markets, foreign developed markets. Let's take a look at the emerging markets, a little more weakness there.

CHRIS SIPES CFP®: As a reminder for the emerging markets, China makes up about 30% of this emerging markets index. So it's going to have a little more concentration around what's China doing. Now, we have seen weakness several times along the way of this kind of more recent bull market in the emerging markets.

CHRIS SIPES CFP®: It's much more volatile. So you kind of lose that 50-day moving average more often than what you have seen in the S&P. So it's kind of too early to tell if this is a serious moment or not.

CHRIS SIPES CFP®: The overall trends still seem to be intact. We're not seeing that kind of curling over and headed toward a death cross or getting a death cross in the 50-day crossing over the 200-day here. But nonetheless, a little weakness in the emerging markets there. If we take a look at.

CHRIS SIPES CFP®: The ag, which is the U.S. Bond, taking a look at the U.S. Bond market, and this is kind of medium duration. So bonds, when you lend out your money, you can lend that out for very short-term time periods, and you can lend it out for very long-term time periods, like 30 years or more.

CHRIS SIPES CFP®: And so the ag is, I believe, somewhere in the neighborhood of around seven years, five to seven, somewhere in there. Which is kind of considered the, I don't know, kind of the sweet spot. It's like the, kind of the most common time to, you know, lend and borrow. So where are we with that? Well, we've kind of been in the doldrums here.

CHRIS SIPES CFP®: We got the death cross back in May with the rise in interest rates. But we've been kind of chopping sideways since then. And so, but definitely, in a downtrend in terms of the the price of the ag. And that is, if you invert that, that tells you what interest rates are doing. So interest rates are up, which makes the value of bonds go down.

CHRIS SIPES CFP®: And so the value of bonds have been down and, and kind of trending down, which tells you the interest rates are up and trending up. And so no signs of life yet there on the, on the bond market, but Interest rates being in the 4% or 5% range for treasuries, as an example, kind of normalish on the longer-term period.

CHRIS SIPES CFP®: We're used to very low interest rates because of the time period coming out of the great financial crisis, but that's not normal. Historically, that's very not normal, actually. We might trade in this range for a long period of time because this is kind of more of a normal range. In, in that, in that area. All right.

DANO WEIR: So, Wait, wait. Yeah. I got one thing to add about bonds. If you're really loving Chris's description here and you're wondering, man, I really wish these guys would just take a deep dive on bonds. Let me just tease now later this summer, myself and Mr.

DANO WEIR: Sipes with a 30 minute deep dive on bonds and everything he just discussed. So, I know you've been looking for a summer block. And that will be appearing on your YouTube channel here very shortly.

CHRIS SIPES CFP®: Yes, sir. So all one people that are looking forward to that.

DANO WEIR: My mom. Yes, yes.

CHRIS SIPES CFP®: Okay, now we've got long-term Treasury bonds as represented by TLT here. And same kind of deal. Now, the long-term rates have actually been a little less volatile.

CHRIS SIPES CFP®: Oops sorry let's go back one that's gold okay there we go so long-term bonds those rates have been a little less volatile we've we've been sideways here for a while this is only a one-year chart so it doesn't show that much history but we've been we've been kind of in this range for quite a while so even though the 50-day is below the 200-day it's not like it's heading you know south quickly in a direction that was signify that interest rates are moving up quickly on the long end.

CHRIS SIPES CFP®: They're just kind of down in the doldrums. But we did kind of hit that psychological number on the 30-year interest rates of 5%. And so that has been a psychological barrier. And usually when we've hit that 5%, the rates have kind of tended to come down. We'll see if that happens this time. We're definitely flirting in that area today.

CHRIS SIPES CFP®: And that has been a headwind for bonds. And you can see that bonds peaked going basically into the war. So the day that the war started was essentially the peak in bonds, or sorry, in gold. And we've seen the sell-off there. Now, here we do have a downtrend. We've got the 50-day crossing the 200-day on the downside, which is lovingly referred to as the...

CHRIS SIPES CFP®: Death cross that tends to show a a a change in direction overall in in an asset class we'll see if gold can you know start to to pull pull up on the levers and you know stop the the nosedive i don't know but an asset class that we saw a ton of strength out of over the last few years And really, 2026 has been rough for gold so far. And so the market's kind of expecting tighter conditions.

CHRIS SIPES CFP®: Assets that it's been rough for, speaking of that, has been Bitcoin. Again, we hit the death cross on that coming into 2026. It's been kind of sideways here for a while. I wouldn't say that the downward trend is extreme in any way, but we definitely got a downward trend with the 50-day tracking below the 200-day in a parallel manner.

CHRIS SIPES CFP®: No signs of a change in direction yet in Bitcoin. On the longer term trends. And then lastly, I want to take a look at a common commodity ETF that is kind of trying to track broad commodities. And you see that we had a lot of strength starting the year in commodities going into the AI build-out and the war. The war started and...

CHRIS SIPES CFP®: Those commodities got an even bigger boost, but really it's interesting since, what do you call that, end of May, beginning of June, we saw a sell-off in the commodity index, but it's come roaring back. We'll see if that strength continues. That was just a blip with possibly the war cooling down a little bit. Now we're heading north again, but definitely starting to hit some kind of...

DANO WEIR: Key technical areas on on the commodities as well that's it Dan that's it for the charts this week and we asked the question are the cracks starting to show as always with every episode we can never truly answer the question because you can only know in hindsight in the market but looking at several factors and wondering interesting We hope you found this episode interesting.

DANO WEIR: That's what we're here for. We're here to provide education, insight, how we see the market. To our clients, thank you so much for being with us to the end of the episode. We hope you enjoyed it. To our prospective clients, our new friends, if you're just finding us for the first time, we are Sonoma Wealth Advisors, the private wealth arm of Fermata Advisors.

DANO WEIR: And you can learn more about how we help individuals and families at sonomowealth.com. Wherever you found this show, whether it's on YouTube or Spotify or Apple Podcasts, make sure to subscribe. You can also leave us a comment if you have any questions. And we appreciate you checking out the show very much. We'll be back next week. Happy summer.

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