Schwab strategist flags casino-like market mood

Charles Schwab’s chief investment strategist, Liz Ann Sonders, highlighted this week what she described as a ‘blurring of the lines between gambling and investing’ as U.S. stocks climbed to record levels. She characterized recent sentiment as ‘casino-like behavior’ and pointed to heightened speculative activity accompanying the latest leg of the rally.

Sonders urged investors to consider rebalancing their portfolios and taking profits to manage concentration risk. She emphasized a disciplined approach, noting that ‘no one ever went broke taking profits,’ and recommended rebalancing as a way to reduce exposure where positions have grown large.

Major U.S. equity benchmarks hit fresh all-time highs this week, with the S&P 500 (SPX) recording its ninth consecutive weekly gain. The advance has unfolded against what Schwab’s research described as a strong earnings backdrop, reinforcing the move in the broader market.

Individual stocks also saw outsized post-earnings moves. Business Insider reported that Dell Technologies shares climbed about 35% after first-quarter earnings beat estimates. Snowflake shares rose nearly 40% after the company posted strong results and announced an expanded partnership with Amazon.

Despite concerns about speculation, Schwab’s Weekly Trader’s Outlook dated May 29 pointed to improving market breadth. The share of S&P 500 components trading above their 200-day simple moving average increased to 60.08% from 57.60% week over week.

Participation also broadened in other major indexes. The Nasdaq Composite saw its percentage of stocks above the 200-day average rise to 47.04% from 43.76%, while the Russell 2000 moved to 62.76% from 58.39%. These figures indicate that gains have extended beyond a narrow set of leaders.

At the same time, Schwab’s analysis highlighted technical signs of stretched conditions. The Weekly Trader’s Outlook noted that both the S&P 500 and the Nasdaq Composite carried relative strength index (RSI) readings above 70, at 73 for each index, a level Schwab cited as indicating near-term overbought conditions.

Schwab’s Monthly Stock Sector Outlook dated May 29 underscored the market’s concentration in a single industry group. Information Technology now represents 35.0% of the S&P 500 and has delivered a trailing 12‑month performance of 52.7%, outpacing the broader index.

Sonders linked her caution on speculative behavior to these concentration dynamics, warning that investors with heavy exposure to winning segments such as technology may face elevated risk if sentiment shifts. Her call for rebalancing is aimed at reducing such concentration while markets are strong.