Citi's Scott Chronert: Here's why we're seeing a market of 'reluctant bulls'

Market Overview & Strategy - The market is considered to be fully pricing in potential positive news, including a possible deal with China, Mag 7 earnings, and the Fed's decision [1] - City's year-end price target for 2025 is based on 2026 fundamentals and earnings trends, indicating a "pay forward" for expected positive developments [2] - The strategist believes corporate earnings reports will be the most reliable data for understanding the broader economy, regardless of a potential government shutdown [4] - A broadening investment thesis is favored, suggesting opportunities in cyclical large-cap sectors, US small and mid-cap companies, and potentially overseas markets [9][10] Sentiment & Positioning - Despite bullish positioning, sentiment appears to be weakening, creating a dichotomy in the market [6] - The market is characterized as being driven by "reluctant bulls," where investors participate due to fear of missing out despite valuation and bubble concerns [7] - Disappointing news from companies or macro perspectives is likely to trigger significant selling, indicating potential volatility [8] Earnings & Growth - Underlying fundamental trends appear persistent, but the key question is whether companies can deliver enough incremental upside to justify current pricing [12][13] - Earnings growth and momentum are expected to remain visible going into 2026 [14] Technical Analysis - The NDX is 18% above its 200-day moving average, a level not seen since last summer when a correction occurred [11]