Is the AI Dip a Buy? Key S&P 500 Levels and the One Bond Market Line to Watch

In our last broad market report on June 18th, we presented a case for caution, presenting numerous warning signs that we tend to see before a correction, ranging from institutional positioning to numerous divergences within the broad market. The one data point that concerned us most had last appeared in 2024, just before the AI trade saw its biggest correction since the uptrend began in 2022: “The economically sensitive Transportation sector is also flashing the same warning. It’s down about 10% while semiconductors are up 43%.  The only other time these two sectors diverged this sharply was July 2024. That divergence marked a one-year top in semis and gave way to a 40% drawdown into the April 2025 low.”