Arab Press

بالشعب و للشعب
Saturday, Apr 11, 2026

Beware the 'melt-up:' Analysts say stocks may soar just before they collapse

Beware the 'melt-up:' Analysts say stocks may soar just before they collapse

Storm clouds appear to be gathering over Wall Street, with many analysts saying a downturn is inevitable. But before the party winds down, some expect an explosive pre-crash rally — known as a "melt-up."

Melt-ups usually occur without any obvious economic reason for the gains. They happen when investors buy assets based on greed, or fear of missing out, instead of fundamental improvements.

First, some quick context: The past five years have been very, very good for investors. The S&P 500 has grown by nearly 90%, and the tech-heavy Nasdaq has grown over 140%. That includes two years of a pandemic that shuttered businesses and snarled global supply chains.

Now the market is grappling with the sobering reality that all bull runs end eventually.

Market watchers say that time may be near amid high inflation, an increasingly hawkish Federal Reserve and geopolitical turmoil. Recently JPMorgan CEO Jamie Dimon warned of "storm clouds on the horizon," former New York Fed president Bill Dudley said he believes a recession is "inevitable" and the yield curve is inverted — when short-term debt pays out more than long-term debt, considered a sign that a bear market could be ahead.

Yet some analysts are predicting a stock market melt-up, in a rush of irrational buying that sends assets soaring just before the bull market's collapse.

Logically, the market has to reach a top before it falls. But historically, there has been a significant acceleration toward that top in the final months before a crash: In 1928, one year ahead of the Great Depression, the Dow hit new highs before crashing by almost 90%. Before its collapse in March 2000, the Nasdaq grew nearly 200% in the 18 months prior.

Currently, sentiment data shows investors are feeling very bearish about the direction of the market, and that they have been for the past two years — during which the S&P 500 returned 75%.

Analysts, meanwhile, are more bullish on individual stocks than they have been in the past decade. Of all the stock ratings on Wall Street, more than 57% are currently "buy" ratings, the highest percentage since September 2011, according to an analysis by InvestorPlace.

"That tells me all the bad news is discounted in the market right now," said David Hunter, Contrarian Macro Advisors' chief macro strategist. "We're at an inflection point for bonds, stocks, rates and the dollar."

Investors are fearful of the Fed tightening monetary policy, Hunter says, but he thinks that inflation is reaching a peak and the tightening cycle will soon end. A quarter-percentage-point rate hike, he says, is meaningless when stock market and home values are nearly 30% above pre-pandemic levels and unemployment is historically low.

"We believe that, if the yield curve inverts, the data says the stock market will have a massive 'melt-up' over the next two years. We're talking 20% or greater gains," wrote Luke Lango, InvestorPlace senior investment analyst.

Hunter predicts that the next quarter or two will bring huge gains to investors, but the fall will also be significant. As stocks continue to soar, investors risk becoming complacent just as prices take a nosedive.

In the heat of a melt-up, investors may feel a keen sense of FOMO. But when the melt-up inevitably melts down, they may be happy they waited it out.

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Strategic Saudi-Bahrain Causeway Closed Amid Security Concerns as Trump Deadline Approaches
Saudi Arabia Keeps Red Sea Oil Exports Flowing Despite Regional Tensions
Pipeline Attack Cuts Significant Share of Saudi Arabia’s Oil Export Capacity
Saudi Business Leader Abudawood Appointed Chairman of Merit Incentives Group
TotalEnergies Confirms Damage at Saudi Refinery Following Security Incident
Saudi Arabia Launches Early Construction Phase for King Salman Stadium Project
Saudi Shift Away from Longstanding Dollar Oil Framework Gains Attention Amid Iran Conflict
Türkiye and Saudi Arabia Resolve Long-Running Transit Visa Dispute
Saudi Oil Capacity and Pipeline Flows Reduced as Supply Risks Intensify
TotalEnergies Reports Damage to Saudi SATORP Refinery Following Security Incidents
Gulf States Assess Prospects of U.S.-Iran Truce as Regional Stability Efforts Intensify
South Korea Resumes Honey Exports to Saudi Arabia Following Sanitary Approval
Saudi Arabia Carries Out Sentences in Eastern Province Following Security Convictions
Saudi Sovereign Wealth Fund Backs King Street’s Regional Credit Strategy
Saudi Arabia Secures World Cup Return as Egypt Celebrates Landmark Qualification
Iran and Saudi Arabia Intensify Diplomatic Engagement Amid Regional Tensions
Russia and Saudi Arabia Open Visa-Free Travel Corridor for Citizens
Saudi Oil Output Capacity Reduced by 600,000 Barrels Per Day Amid Regional Conflict
Saudi Arabia Suspends Operations at Select Energy Sites as Precautionary Measure
Saudi Arabia Halts Operations at Multiple Energy Facilities Amid Heightened Tensions
Global Markets Jolt as Iran Signals Ceasefire Breakdown and Rising Regional Tensions
King Street Aligns with Saudi Sovereign Wealth Fund to Expand Alternative Investments in Middle East
Attack on Saudi Arabia’s Jubail Petrochemical Hub Raises Global Supply Concerns
Debate Emerges Over Saudi Strategic Decisions as Gulf Cooperation Council Dynamics Come Into Focus
Saudi Arabia Expands Full Workforce Localisation to 69 Professions in Major Labour Reform
Emerging Alliance of Pakistan, Turkey, Egypt and Saudi Arabia Signals New Regional Power Dynamic Amid Iran Conflict
Iran Linked to Strikes Across Gulf States Following Refinery Attack Escalation
Saudi Arabia Voices Concern Over Fragile US–Iran Ceasefire Stability
Starmer Warns Sustained Effort Needed to Ensure US–Iran Ceasefire Holds
Saudi Arabia’s Key East-West Oil Pipeline Targeted Following Ceasefire Announcement
Iran Targets Saudi Arabia’s East-West Oil Pipeline in Escalating Regional Tensions
Trump Warns of Civilizational Stakes as Iran Halts Negotiations
Saudi Companies Expand Remote Work Measures Ahead of Iran-Related Security Concerns
Iran Warns of Strikes on Saudi Energy Infrastructure if US Targets Its Facilities
Iran Urges Civilians to Form Human Shields Around Nuclear Sites as Diplomatic Deadline Approaches
Saudi Arabia Raises Oil Prices to Record Premiums Amid Supply Pressures Linked to Iran Conflict
Key Saudi-Bahrain Causeway Closed Amid Heightened Security Concerns Linked to Iran
Formula One Calendar Gap Explained as Fans Await Next Grand Prix
Growing Strain on the Petrodollar System Comes Into Focus Amid Iran Conflict
Reported Strike on Saudi Arabia’s Jubail Complex Raises Global Energy Supply Concerns
FedEx Introduces New Digital Tool to Streamline Imports into Saudi Arabia
Iran Claims Strike on Saudi Arabia’s Jubail Petrochemical Complex Amid Rising Regional Tensions
Taiwan to Source Oil Shipments from Saudi Arabia’s Red Sea Ports
Saudi Arabia Evacuates Riyadh Financial District as Precaution Amid Regional Tensions
Saudi Arabia Balances Ambitious Economic Vision Amid Regional Tensions and Financial Pressures
Budget Saudi Arabia Reports Strong Full-Year 2025 Financial Performance
Saudi Arabia Expands Investment in Capcom With Stake Reaching Six Percent
Saudi Arabia Assesses Significant Economic Impact From Regional Conflict Involving Iran
US Beef Secures Expanded Market Access in Saudi Arabia
Jordan and Saudi Arabia Declare Absolute Solidarity in Response to Iranian Threats
×