Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / AI Agents Are Rewriting Momentum in This Bull Market
Transcript
- Lucas: So the S&P 500 is sitting just above 7,400, the Dow is north of 52,700, the Nasdaq is pushing 24,900 — and yet there's this fascinating undercurrent that not enough people are talking about: a whole new class of AI agents are starting to trade markets 24 hours a day, seven days a week. Luna: I saw that CNBC piece — startups and even traditional brokers building these adaptive algorithms that learn from market patterns in real time. It feels different from the high-frequency trading we've seen for years. Lucas: Exactly. The difference is these agents aren't just executing pre-programmed strategies — they're using large language models and reinforcement learning to actually 'think' about the market. And in a bull market with clear trends and relatively low volatility, they can ride momentum beautifully. Luna: But that also means they're all reading from the same playbook, right? If everyone's training on similar data, you could get this herding effect that amplifies moves both ways. Lucas: That's the billion-dollar question. Right now, the market is rewarding the kind of steady upward drift that these agents are built to exploit. But look at the Russell 2000 — it's down about half a percent over the past five days even as the big indexes hit records. That tells me the AI trade is highly concentrated in the mega-cap names that can afford to deploy this tech. Small caps are getting left behind. Luna: So the bull market is effectively becoming a two-tiered system: the ai enabled large caps that benefit from the efficiency gains, and everyone else struggling to keep up. That's not exactly a recipe for broad-based health. Lucas: No, and it echoes what we saw with the dot-com bubble — except this time, the productivity gains might be real. Visa just announced it's cutting 7% of its workforce as part of an ai driven efficiency push. That's a concrete example of a company using AI to boost margins, which in a bull market gets rewarded with a higher stock price. But it also raises questions about consumer spending and employment. Luna: Right, because if AI is automating jobs across finance and payments, where does the demand come from to sustain this rally? The GDP growth is still around 2.1%, but the Fed is holding rates at 3.63%. The market is pricing in a soft landing, but the tightening hasn't really filtered down to Main Street yet. Lucas: And that's the tension. These AI trading agents are essentially a bet that the current trend continues — that the mega-caps keep delivering, that volatility stays low, that the Fed doesn't have to rock the boat. But if anything shakes that confidence, the sell-off could be just as algorithmic on the way down. Luna: So what's the play for listeners who want to ride this momentum without getting caught in a potential crash? Is there a way to track what these AI agents are doing? Lucas: It's tough because most of them are proprietary. But one signal is the sheer volume in the largest stocks — names like Microsoft, Apple, NVIDIA — where a lot of this liquidity is concentrated. If you see volume spikes without a clear catalyst, it's possible the algos are piling on. The other thing is to keep an eye on the VIX. If it starts creeping up from these low levels, it could be a warning that the AI herd is starting to bolt. Luna: Honestly, if this conversation helped you think about the market a little differently, that's the whole point of what we do here. And if it was worth the price of a coffee, you can find the link at buy me a coffee dot com slash fexingo. No pressure, just a way to keep this ad-free and independent. Lucas: Yeah, we really appreciate those who do. It's what lets us dig into angles like this without worrying about sponsors. Anyway, back to the AI agents — the key takeaway is that they're not going away. They're going to become a bigger part of market structure, and understanding their logic could be an edge. Luna: Absolutely. It's a new layer of complexity, but for the nimble investor, it's also an opportunity to watch where the smart money is flowing — even if that smart money is a machine. Lucas: Exactly. So keep your eyes on the volume, keep your stop losses tight, and remember that in a bull market fueled by algorithms, the fundamentals still matter. The companies that generate real cash flow and real productivity gains will survive any correction. It's the ones riding purely on hype that will get shaken out when the AI agents all decide to sell at once.