The Monday Morning Playbook: Week of October 6, 2025

Good morning,

Let’s talk a little bit about bubbles.

It seems the consensus has established that we’re in the midst of an AI bubble.

Whether it’s the amount of earnings growth attributed to AI, the huge run in semiconductors, data center stocks, or even utilities, or just the fact that the S&P 500 is up a lot (again) so far this year, everybody seems certain that the “bubble” is destined to pop.

But best I can tell, bubble is a pretty arbitrary term. For as long as we’ve had stock markets, they’ve gone up, and they’ve gone down. And a “bubble” is just when they go up “a lot” and then they go down a lot?

If that’s the case, then tactical investors should be focused on which one of those is happening right now. And if you’re confused about which, let me alert you to the fact that both the S&P 500 and the chronically underperforming Russell 2000 hit ALL-TIME highs on Friday.

For the S&P 500, this was all-time high #1601 since 1950. And you know how many of those prior highs marked the top of a 20% drawdown?

About 12. Or 0.7%.

So could Friday have been the top? Maybe.

But that’s certainly not the bet I’m making.

As today’s report will show, market tops are a process. And they consistently have warning signs. Will those warning signs have you in 100% cash at the top? Absolutely not. But you can’t follow the trends and make money in a bull market and expect to.

This week’s report will review:

• Q3 performance

• Last week’s major index moves

• A brief history of market tops

• Small caps and breadth right now

• Key leadership groups

• and more!