This was a fantastic week for the markets.

The S&P 500 has hit 6,600 for the first time in history.

This is the 24th all-time high this year. Few signals are more bullish than new highs.

The index is now up 36% from its April bottom.

That makes this one of the strongest five-month rallies ever.

Since 1975, the S&P 500 has risen 30% or more in five months only six times. Each time, the index was higher a year later, with an average gain of 18%.

If there’s one sector to watch to see where the market is headed, it’s semiconductors.

They’re the lifeblood of this AI-fueled bull market.

The market isn’t just about big tech.

The Russell 2000 has outperformed the S&P 500 and now has the most stocks trading above their 200-day moving average in nine months.

Small-caps are starting to show life. And look ready to push for new all-time highs.

It’s about time: 959 days have passed since their last high, matching the longest streak in history.

This is a broad market rally.

The takeaway is simple: across multiple timeframes, most major indexes are showing strength.

Sentiment tells a different story.

All three indices keep hitting new all-time highs, yet last week was the sixth straight with more bears than bulls.

Bearish sentiment is now at 49.5%. The higher the market goes, the more skeptical investors become.

That skepticism is actually fuel for higher prices, with plenty of money still sitting on the sidelines as the market climbs.

Asset managers and hedge funds have been on the sidelines all year, refusing to buy into this bull run. Their underweight positions are leaving them scrambling as Q4 approaches.

How long can that last? They’re running out of time to beat the S&P 500 and their benchmarks. Eventually they will be forced to buy in.

On top of it all, the Fed is about to start cutting rates.

Markets are now pricing in six cuts through 2026, with the first expected next week.

In 20 out of the last 20 times that the Fed has cut rates with the S&P 500 at record highs, stocks ended higher 12 months later.

In fact, the S&P 500 rallied an average of 13.9% over the following 12 months.

However, in 11 out of the last 22 times that this has happened, stocks ended lower 1 month later.

So, short-term volatility here would be normal, but the long-term trend has consistently favored the bulls.

Analysts are also revising Q3 EPS estimates higher, which is rare and a very positive sign. Since estimates are typically revised lower during the quarter, and not up.

AI remains the main driver of this market, not only terms of market cap, but also earnings growth.

About 30 AI stocks in the S&P 500 now account for 43% of market cap and nearly all of the index’s earnings growth since late 2022.

If you’re not investing in AI, you’re missing out.

In short, record highs, a Fed pivot, and underpositioned investors are all coming together. This combination sets the stage for next leg higher. And if we see some near-term volatility, it could actually create excellent buying opportunities.