The Bear Conspiracy Pt.2: Not out of the woods…yet

Is it over?

One glance through the gap between my fingers shows almost all green on the small-cap watchlist. Almost all green in micro-cap land too.

But we’re not quite there yet for the more speculative parts of the market.

Yesterday I pointed out surging US biotech indices and ETFs. These suggest the AI bubble panic was more about big funds shifting the media narrative in order to re-position.

I took specific umbrage with Ray Dalio.

I think he runs a cynical but also shrewd spin machine based on a cult of personality. And the returns have been great for his ~US$135BN Bridgewater.

But you should keep your eye on the ball. The larger point is about what is beyond the headlines and your internal psychology.

Speaking of THE headline…

All eyes were on the Nvidia earnings release last week.

Good results caused a pump, a sudden dump and then an eerie calm edge up.

I watched the numbers come in live like a hawk because market psychology is a self-fulfilling prophecy.

If people think it’s important it becomes important. After all, it certainly moves prices.

Technical analysis is sometimes dismissed as woo-woo astrology.

But it helps define a narrative – it’s effectively a massive map of the psychology of an asset’s value over time.

So, if the smaller side of the market interests you, the chart below is the one to watch.

The XEC tells the story

If you like small-caps and micro-caps then the ASX Emerging Companies Index remains a good barometer for the health of these parts of the market.

We had a top in 2022. Three years in a barren tundra of sad capital raises. An almighty 63% run up from the April tariff mini-panic.

And now a 15% retracement is taking us back to where we were at the start of 2022.

Source: TradingView

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This reads to me as the market cooling off, not collapsing. More like a half time break than the final whistle.

What’s next for risk capital?

I reckon rare earths and Aussie real estate exposures have had their run for now.

When China slapped export restrictions on rare earths in April as retaliation for Trump’s tariffs, ASX rare earth miners went ballistic. Some names ran 100% to 380% in weeks.

That was the speculative frenzy since the April low point when tariffs freaked everyone out.

But the market needs to find new shiny objects to obsess over.

And I think I know where they are.

Lithium, copper, biotechs and uranium

My big thesis for the next leg of the bull run sits with these four sectors.

Call it the speculative growth trade.

Lithium is my conviction play for 2026.

The US government isn’t messing around anymore. When they get really serious about lithium supply, they’ll need to move fast on a very small group of ASX developers with world-class projects.

Copper? UBS just raised their price target to $11,500 for March 2026. Then $12,000, $12,500, and $13,000 as we move through the year. The structural deficit is real. Demand is set to surge 24% by 2035 and new mine supply can take 17 years from discovery to production.

Uranium is poised at US$75/lb after having two cracks at US$80/lb. I believe it should push towards $90 to $100 by mid-2026 as the AI-nuclear renaissance gathers steam.

And biotechs? The Nasdaq Biotech Index is up ~30% this year. That should filter through to ASX biotechs in the coming months as there are very strong capital markets ties between the two countries in this sector.

Lithium = growth in energy storage

Copper = growth in the global economy + electrification

Biotechs = growth in demand for risk and cashflows that could be a long way off

Uranium = growth in stable energy supply for Big Tech

There may be more geopolitical twists and turns.

The US Fed may starve the market of liquidity and sabotage Trump’s big beautiful stock market bull run.

But the trajectory for these risk-on, speculative growth trade sectors looks better than people think.

And there’s definitely still great value out there if you feel like you missed the rare earths/silver/gold speculative ramp.

I’m not Ray Dalio

Our job in this business is to present alternative viewpoints.

When consensus screams bearish and every talking head predicts doom, someone needs to say: wait a minute.

Dalio says the market is 80% into a bubble.

But even he admits we don’t have the pricking of the bubble yet.

If being a bull in this environment qualifies as an alternative viewpoint right now, then call me a bull.

I’m particularly bullish on the first half of 2026.

The game is always the same. Big funds position first. Media narratives follow. Retail reacts last. And by the time the story is everywhere, the trade is already done.

Maybe, just maybe, the biotech indices yesterday, and the potential floor being put in on the XEC is telling you something the talking heads won’t.

Don’t be the exit liquidity.