Last week, I discussed the third straight weekly decline in the S&P 500, and stocks did fall again this week, with bonds rallying again. That's four straight weeks!

A Look at the Market

The moves this week were due to the elections. Not that it was that much of a surprise, but the Democrats recaptured the House of Representatives. This wasn't expected, but it was considered possible, and they also took control of the Senate. The market ran up on Wednesday but plunged on Thursday. The S&P 500 has returned 8.7% with dividends included, and the price is up 7.8% for SPDR S&P 500 ETF (SPY) in 2026 so far. This leaves the market on track to post a return for the full year right over 10%. At the same time, iShares Core US Aggregate Bond ETF (AGG) has declined in price in 2026. With dividends included, the return has been -0.0%, which is well below cash.

This may be the start of a bear market, the last of which was in 2020 for the S&P 500. A bear market is traditionally defined as a decline of more than 20%, while a correction is defined as a decline of 10%. The S&P 500 has dropped in price by 6% from its all-time high set in October. QQQ, though, which led the way lower this week, closed 14% below its all-time high, and it has bounced too, rising 1.4% on Friday.

I regularly point to the problems with the S&P 500 in terms of its exposure to its top 10 names and to the Technology sector, and QQQ suffers similarly. The Technology sector has been boosted by Semiconductor stocks (3 of the 10 largest names in the S&P 500 are from that industry), and they are in a bear market (by the popular definition), as they are currently 37% below the all-time high set in June for SOXX and 30.7% for SMH.

What's wrong with semiconductors? Due to demand from AI data centers, the sales have soared due to units and higher prices for memory chips, and this has sent the stocks soaring. AI demand is strong and will remain strong, but the financing for thsse chips and data centers is a little funky, and there is a chance that the government could slow the industry. You may not care about chips, but, if you own the S&P 500, you own them!

Here is the year-to-date action for some indices:

Note that despite the sharp move lower over the past month, the semiconductors are still up a lot in 2026. It's kind of funny to see QQQ up less than SPY, but it is (despite the move up in semiconductors). You can see that since the end of 2022, semiconductor stocks have soared:

It's possible that the prices of these stocks could keep falling, and it's possible that a slowdown in AI expansion could hurt the economy. I don't have a different view yet despite this sharp move lower: Avoid large-cap Technology stocks!

ETF Model Portfolio Update

This ETF model portfolio, which is measured against 60% SPY and 40% AGG, is down slightly year-to-date relative to its benchmark. This week, I did a few trades that were published here instead of on my Seeking Alpha blog. For those who would like real-time alerts (free of charge for now), just subscribe to the blog.

I haven't written any ETF articles on this blog or on TalkMarkets recently, but I did share this at Medium:

Bitcoin Is Trying to Bounce

Going into the week, my model portfolio equity exposure totaled 46.7%, spread out across two ETFs. Here is what I did this week:

• Monday: I added Vanguard Short-Term Inflation-Protected Index ETF (VTIP)

• Wednesday: I reduced  S&P MidCap 400 Dividend Aristocrats (REGL) further.

• Thursday: I added to VTIP by reducing some iShares TIPS Bond ETF (TIP), and, later, I added a new position in Vanguard Morningstar Small-Cap Value ETF (VBR), funding it with a reduction in VTIP.

  
  

Here is the current model portfolio, which now has 48.1% equity exposure in three ETFs and fixed income exposure in two TIPS ETFs that total 51.9%, with cash at about zero:

After starting strong, the model portfolio had a rough Q3, but it is now back on track. The S&P 500 posted an all-time high in early October, but it looks like a double-top to me. The Russell 2000 posted an all-time high in mid-August but has pulled back more than 10% from that high, though it is bouncing now. Being underweight stocks all year, my return relative to the 60/40 index is higher again after going negative in early October. It is currently about +6.2% over 10+ months. This was another solid week of over 1.6% outperformance. As the S&P 500 fell and the Aggregate Bond Index bounced again, the model portfolio, which was up very slightly, outperformed the index.

The early year-to-date strong relative performance was not due to superior returns on the equity ETFs. My TIPS ETFs have done reasonably okay relative to AGG, at least until very recently, but they aren't exactly boosting the return. I have had positive returns from three ETFs, two of which I no longer hold and one of which was down a lot year-to-date but rallied while I held it, and there has been some good trading that has helped me with a bad overall asset allocation weighting.

How I Can Help You

I enjoy analyzing ETFs and stocks, and I like sharing my thinking in writing. I was considering starting a subscription service or joining one that is already being published. What things would you as an investor like to see offered?

If you are an investment professional, I would like to work with you as well. I can help educate financial consultants about the ETFs, and I can work with management at investment firms to help create model portfolios or potential ETF investments. Please let me know if your firm would be interested in this.

My ETF articles at Seeking Alpha, written under the alias The Intelligent ETF Investor, shared a lot of my ideas. I continue to share those ideas here on this blog.