US stocks keep hitting new highs, are you starting to get scared?

US stocks are hitting new highs, and there's no debate about it.

At the close of trading on May 11 (Eastern Time), the S&P 500 rose 0.2% to 7,412.84, and the Nasdaq rose 0.1% to 26,274.13, both continuing to set new closing record highs.

But being strong doesn't mean it's easy to trade.

The issue now isn't whether the index is up or down, but *what* is driving the gains. The forces pushing the index higher remain the same old themes: AI, chips, semiconductors, and data centers. For example, on May 11:

• The Philadelphia Semiconductor Index rose 2.6%, Intel (INTC.M) rose 3.6%, and Qualcomm (QCOM.M) rose 8.4%.
• The divergence in ETFs was even more direct: SPY.M rose 0.20%, QQQ.M rose 0.29%, and SOXX.M rose 1.74%.
• But the Healthcare ETF XLV.M fell 0.32%, and the Software ETF IGV.M fell 0.44%.

Looking at the Maitong asset pool, these core ETFs and related stocks have a fairly clear trading map that has long laid out the market picture. Semiconductors are still surging, the AI hardware chain is still absorbing capital, and funds are willing to pay high premiums only for the strongest lines. Meanwhile, healthcare can't keep up, software is lagging, and other sectors are increasingly becoming background noise.

In the view of Maitong, the focus of current market trading is no longer just whether the index will continue to rise, but whether the structure and breadth behind the rise can sustain the subsequent trend. We are currently in the most typical state of a high market: funds are still willing to go long, but only willing to pay for the most certain, most crowded, and strongest assets.

In simple terms, the market hasn't turned off risk appetite; it just doesn't intend to allocate its risk budget to most stocks. So, when looking at US stocks now, you can't just look at the index. The stronger the index, the more you need to look at the structure; the more new highs, the more you need to look at breadth.

Because the real trouble at high levels is never that the index stops rising; it's that the index is still rising, but the places where you can make money are getting fewer and fewer.

1. Have US stocks peaked?

The most frustrating thing for many people now isn't getting the direction wrong, but their positions starting to feel off.

Sell, and fear missing out on further short-squeezing; don't sell, and fear a pullback wiping out previous profits.

This is also the most typical state of a high-level market. The trend is indeed not broken, the main theme is still there. AI hasn't fizzled out, semiconductors haven't weakened, and tech heavyweights are still supporting the index upwards. As long as the herd hasn't scattered, US stocks won't automatically fall just because they "look too expensive."

The problem lies in the fact that the current rally is not the same as the rally during the bottoming-out phase. At lows, the market trades on the repair of pessimistic expectations – as long as things don't get worse, stock prices have elasticity. At highs, the market trades on the realization of optimistic expectations – if things don't continue to exceed expectations, stock prices are likely to fall first.

These are two completely different markets.

At lows, there's room for error; at highs, there's almost none. In other words, buying at lows is about the risk-reward ratio, worrying about whether it will recover; buying at highs is about the speed of realization, worrying about why it should go higher.

So objectively speaking, the last thing you should do now is to keep applying the mentality of a low-level market and keep pushing your positions higher. Because once earnings aren't strong enough, orders aren't fast enough, gross margins don't hold, capital expenditure falls short of expectations, or inflation and interest rates rear their heads again, the direction that has risen the most is often the first to get sold off.

This isn't because the logic suddenly disappeared, but because the price has long priced in the most optimistic part of the logic.

In short, now is not the time to be guessing the market top; now is the time to re-examine your positions.

As for whether US stocks have peaked?

I don't think we can directly conclude that "US stocks have peaked" yet. That statement is too premature – after all, the trend isn't broken, the main theme isn't broken, and the capital hasn't dispersed.

But these three "haven't broken" don't mean you can just sit back and do nothing. What you really need to guard against now is not a sudden crash this afternoon or a direct turn into a bear market right after the opening tomorrow.

What you really need to guard against is a more significant and more concentrated pullback sometime in the second half of the year.

The reasons are not complicated.

This rally has been too concentrated from the start. For instance, AI expectations are already fully priced in, the elasticity of semiconductors has been over-traded, options activity is too rampant, and interest rates and inflation haven't truly provided a comfortable environment for high-valuation assets.

As long as these conditions continue to align, the index can, of course, keep grinding higher.

But that's also the problem. The current rise increasingly depends on "nothing going wrong." If just one link in the chain breaks, the market could switch from "continued short-squeezing" to "concentrated pullback."

Especially now that pricing is very discerning. What the market is trading on is no longer a first-level judgment like "will AI grow?" but rather: Can AI keep exceeding expectations? Can semiconductors keep outperforming? Can capital expenditure be continuously revised upward? Can orders from big tech companies be consistently fulfilled? Can high valuations be continuously supported by even higher expectations? This is the hardest part of being at high levels.

It's not that bad companies will fall; it's that good companies will fall too. It's not that the main theme has lost its logic; it's that the main theme is too expensive, so expensive that being just slightly less than perfect is unacceptable.

Therefore, the most important thing at this level is not to shout bearishness, nor to keep hyping yourself up, but to reduce the net risk in your portfolio.

2. How to operate now?

In one sentence: keep what should be kept, reduce what should be reduced.

The most important thing next is to re-stratify your positions. Ultimately, not all positions that are rising should be held in the same way.

For example, core assets with real earnings, orders, cash flow, and industry positions should not be completely sold off just because of "fear of highs." Because the most common and most expensive mistake in a bull market is not losing money, but selling off the real main theme and then being afraid to buy back later.

But trading positions cannot be handled this way. For positions that have risen too fast in the short term, driven mainly by sentiment and capital, you can't keep using long-term logic as an excuse. They are trading positions by nature, so they should be treated as such:

• If they surge on volume but can't hold the gains, you can reduce.
• If the index hits a new high but they don't follow, you can reduce.
• If they break below short-term trend lines, you shouldn't stubbornly hold on.

The most common mistake in a high-level market is not getting the direction wrong, but treating trading positions as core positions and short-term profits as long-term convictions.

These two things sound like psychological issues, but in essence, they are portfolio issues. Core positions can withstand volatility because you are buying longer-term logic and stronger fundamentals. Trading positions cannot. Once a trading position loses its elasticity, it stops being a position and becomes a burden.

So, the most important thing to do now is not to handle all positions together, but first ask yourself clearly: which positions are you willing to hold through the volatility? Which positions have you just not had the heart to sell because they were rising fast, furiously, and intoxicatingly?

The former can be kept; the latter needs to cool down.

Besides this, you also need to watch for lagging stocks even more closely going forward.

For example, on May 11, SOXX.M continued to rise by 2.39%. What does this mean?

It means the AI hardware chain hasn't fizzled out yet. The strongest style in the market is still continuing, and the herd hasn't scattered. But precisely because the strongest direction is still surging, you need to look even harder at stocks that are unable to rally.

In a high-level market, the most dangerous are never the stocks everyone knows are strong. The truly dangerous ones are stocks that fail to keep pace when the index hits new highs, can't bounce back during sector rallies, and fall back after positive news is released.

These lagging signals are not complicated:

• The index hits a new high, but the stock doesn't.
• The sector rallies, but the stock's rebound is weak.
• Good news comes out, but the stock surges and then retreats.
• The market drops slightly, but the stock falls much more.
• The market rebounds, but the stock bounces back less.

This type of stock is already dangerous in a strong market.

Because if they can't rally when the market is good, once the market pulls back, they often don't just play catch-up; they fall first. Therefore, healthcare, traditional consumer staples, utilities, some energy stocks, and traditional SaaS software stocks can all be placed in a laggard watchlist.

Software is particularly worth examining separately. In this AI-driven rally, software hasn't been completely without opportunities. However, the valuation logic for traditional SaaS is increasingly unstable. Companies like Salesforce (CRM.M), Adobe (ADBE.M), ServiceNow (NOW.M), and Intuit (INTU.M) are, of course, not bad companies.

The problem isn't company quality; it's that the market is starting to re-evaluate one thing: Will AI help them raise prices, expand revenue, and open up new demand? Or will it conversely undermine the old story of charging per seat and tool-based premiums?

In other words, the software sector is no longer rising uniformly internally.

Capital is now very discerning. It's looking at who can turn AI into new revenue, who is just using AI to stay alive, who can still maintain their valuation, and who is merely a high-valuation relic of an old model.

Therefore, going forward, you can't just focus on the strongest stocks; you must also focus on lagging stocks. Strong stocks determine whether the index can hold steady, while lagging stocks determine where a pullback will start first.

3. The Hedge Needed is Defense

At this stage, a portfolio can have defensive positions, but they are not for betting on an immediate market reversal.

If you hold a heavy long position but are unwilling to easily sell your core positions, you can use a small percentage of short positions, index hedges, or protective puts to manage volatility.

The key points are "small percentage" and "manage volatility."

Simply put, this is not an instruction for you to go all-in short or bet on a market crash tomorrow. The purpose of short positions here is to buy insurance. Because another common mistake many people make at this stage is seeing lagging stocks and thinking they can use them as primary defensive positions. This isn't necessarily correct.

Laggard stocks can be placed in a watchlist. After confirming a breakdown, you could use a small position for auxiliary shorting. But they are not necessarily suitable as the core insurance for your portfolio.

Because what a defensive position truly needs to hedge against is not what you dislike, but what you are most afraid of falling in your portfolio.

If the main risk in your portfolio comes from QQQ.M, semiconductors, or AI tech heavyweights, then what you truly need to hedge against is a pullback in these exact areas. For example, if you fear a Nasdaq pullback, look at QQQ.M; if you fear a semiconductor pullback, look at SOX-related directions; if you fear overconcentration in individual stocks, then reduce your high-beta positions yourself first.

At this point, the worst thing to do is to be fully long the most crowded tech theme on one hand while shorting a healthcare or consumer stock that has been weak for a long time on the other, thinking you have completed a hedge.

That is not defense; it's just placing a bet somewhere else.

Always remember, the goal of a defensive position is never to make a lot of money; it's to make your portfolio feel a little less uncomfortable when things get tough.

4. The Test on May 15, and the Outlook for the Second Half of the Year

Looking ahead in the short term, May 15 is an unavoidable window.

The reason isn't mysterious. It sits right after a string of important variables – this day is the monthly standard options expiration date (OPEX). Concurrently, index options like SPX and XSP are no longer just monthly occurrences; the market's reliance on 0DTE and short-term options is growing stronger.

Therefore, options expiration itself is more worthy of attention than in the past.

But what makes May 15 truly important is not that "it must fall on that day." Instead, it perfectly aligns right after a set of key data releases: the April CPI will be released at 8:30 AM ET on May 12; the April PPI on May 13 at 8:30 AM; and the April Retail Sales report on May 14 at 8:30 AM.

This means the market will first digest inflation, producer prices, and consumer data before entering the options expiration window. This combination itself is sensitive enough.

If CPI and PPI aren't hot, and retail sales aren't strong enough to push rates higher again, tech heavyweights could hold steady, and semiconductors could remain strong. Then, May 15 is more likely to be just a period of high-level consolidation, or bulls might even push the market higher using the expiration structure.

However, if the data runs hot, causing interest rates to trend higher again, coupled with pullbacks in