A “Power Trend” is a high-conviction technical uptrend identified by former IBD strategist Mike Webster when major indexes such as the Nasdaq and S&P 500 display exceptional strength, often lasting 3–10 weeks and historically supporting meaningful market gains. It requires a specific alignment of moving averages that signals sustained institutional buying: the 21-day EMA must remain above the 50-day SMA for at least five consecutive trading days.
We are currently in a confirmed Power Trend, which gives me the conviction to remain fully invested. That said, the market is becoming extended in the near term and appears vulnerable to normal profit-taking or consolidation before advancing further.
The Fed steadily reduced its balance sheet from April 14, 2022, through December 4, 2025, shrinking it by approximately $2.5 trillion. Since bottoming on December 4, 2025, however, the balance sheet has expanded by more than $164 billion. While this renewed liquidity expansion supports asset prices, it also has the potential to rekindle inflation expectations.
Historically, expanding liquidity tends to place upward pressure on long-term interest rates and supports hard assets such as gold. Rising inflation expectations can push bond yields higher as investors demand greater compensation for future purchasing-power erosion. Gold often benefits as both an inflation hedge and a store of value during periods of monetary expansion and uncertainty.
Our largest portfolio weightings remain concentrated in AI-related companies, emerging-market bonds, and select hedged mutual funds. Several long/short and hedged strategies are performing particularly well in the current environment, helping provide balance and downside mitigation across client accounts.
The memory-related AI stocks have become extended, but strong demand dynamics could drive them even higher. Unlike fiat liquidity, semiconductor memory supply cannot be created instantly. Capacity constraints, combined with accelerating demand for AI infrastructure, continue to support elevated pricing and strong fundamentals for leading memory producers.
Overall, I remain comfortable with our positioning as we participate in this powerful uptrend while maintaining prudent diversification through hedged exposure.
Everyone who calls on the name of the Lord will be saved. Romans 10:13