Share Buybacks Window Opening Wider

1.) BUYBACKS – Recently, I’ve commented on share buybacks being one of the larger components of open market buys. Today, it's estimated that only ~45% of the S&P 500 by weight is eligible to repurchase shares. That figure is expected to increase to 75% by the end of next week and nearly 85% by mid-August as the earnings blackout windows expire. Corporate demand is now set to reaccelerate precisely as positioning has become materially cleaner.

2.) ATH – Many investors continue to be afraid of new highs in the stock market, thinking that “it HAS to go down from here.” Narratives of the next “big global market crash is on the horizon,” etc., etc are always around and get louder at times like this. You know the stories. I’m sure you’ve heard or read them on various social media outlets. These are designed to scare you, get clicks and follows. They are not designed to help you. Solution? Don’t read or listen to them! The bottom line is that fresh all-time highs are bullish. I know that probably sounds obvious, but investors often overthink them. Investors often see a market at record levels and immediately start looking for reasons it has gone too far. Importantly, the Dow (and other major indexes) did not rip straight higher without stopping. They spent time digesting the prior move, held above key moving averages, and then pushed to fresh highs again. That is how strong markets often behave. They pause, reset, and continue. The Dow continuing its advance shows large, established blue-chip stocks are participating in the advance. Flows, sentiment, and trend are the big three, and the trend backdrop confirms the message.

3.) INVENTORIES – The inventory/sales ratio (measured as the number of days it would take to clear the shelves) has now fallen to 67.9 days, lower than at the trough of each of the last three recessions. This is bullish (positive for the economy and stocks). A falling inventory/sales ratio (here measured in days of sales) means inventories are lean relative to current sales levels. Companies are clearing shelves faster, which typically reflects solid demand rather than excess stock building up. Low inventories often prompt restocking and higher production orders. This supports manufacturing activity, supply-chain demand, and corporate revenues/profits. It reduces the risk of forced discounting or write-downs that hurt margins. The fact that the ratio is now lower than the troughs of the last three recessions underscores how tight inventories are, increasing the odds of a restocking cycle.