Monday Takeaways: Single-Stock ETFs Signal Speculation Is Back

Shah Gilani|July 28, 2025

ETFs now outnumber individual listed stocks in America…

And the flood of new single-stock ETFs tells us everything about where this market is headed.

We’re seeing 2x and 3x leveraged ETFs tracking individual names like Nvidia, Microsoft, and Apple. Plus inverse products for those betting against them.

What this speculation surge means:

• Investors want leverage beyond traditional options
• Risk-on sentiment is dominating market psychology
• The “passive bid” is creating unprecedented momentum
• Frothy conditions could drive another leg higher

This week’s earnings from Meta, Apple, Amazon, and Microsoft will test whether this speculative appetite can be sustained. These four companies represent nearly 20% of S&P 500 market cap.

Add in a Fed meeting that could surprise with a rate cut and Friday’s jobs report, and we have all the ingredients for either a continuation rally or a reality check.

I’ll break down what the ETF explosion really means, how to play the speculation without getting burned, and why the “passive bid” could keep pushing markets higher.

Click on the image below to understand where this speculation leads.

Transcript

Hey everybody, Shah Gilani here with your Monday takeaways.

First up, the look back at last week. Five consecutive record days for the S&P 500. That’s right, five consecutive record days.

So markets are moving higher. And they should be because so far they have climbed every wall of worry. But there’s another reason that markets are going higher. It’s the so-called passive bid, and it’s huge.

What is the passive bid? The passive bid is mostly index funds.

And the rest of the ETFs that follow the big names that maybe are based on momentum, maybe they’re based on tech, maybe they’re based on AI, maybe they’re based on whatever’s hot. And there are always new ETFs coming out. But the passive bid means that as people, investors, traders put money into index funds, even if they’re just parking temporarily while they’re looking for perhaps their favorite stocks to come down to buy in a little lower – good luck with that – they are putting money to work in index funds, in mostly ETFs, not mutual funds. What does that do?

Well, the money that goes into those ETFs has to be put to work. And how is it put to work? Well, they go out, the sponsors, associated persons who manage the trading of those go out and have to buy all the underlying shares on a pro rata basis that make up the full ETF’s portfolio. And what is that?

For the most part, it’s done based on capitalization weighting. So they’re buying most of the big mega cap tech names that have been moving the market. So yes, this is what we’re seeing from the passive bid. A lot of passive money coming into the market and moving the whole market forward.

Is it the whole market? Yes, the indexes are moving higher. But not all the stocks – it’s just the big cap stocks that are pushing the rest of the indices higher. So that’s what’s going on.

Five record days in a row. You can’t really fault that. Now, speaking of ETFs, ETFs now surpass listed stocks in the U.S. The number of ETFs surpass the number of listed stocks in the U.S.

A flood of single stock ETFs have come out this year.

A tremendous flood of them. What are single stock ETFs? They’re ETFs that leverage-wise maybe two or three times or are inverse ETFs that track a single stock, be it Nvidia or Microsoft or Apple. These are single stock ETFs.

What is with the proliferation of single stock? Well, investors want leverage, and one way to get that other than options is by buying some of these single stock ETFs that are leveraged two or three times. And if you want to make a reversal bet or a hedge, you can buy an inverse single stock ETF. So the popularity of these single stock ETFs tells me that investors are in a speculative mode, they’re certainly in a risk-on mode, and we’re starting to see a lot more speculation in the market. Hence, we just saw a slew of new single stock ETFs come to market in the last couple of weeks. Well, they got registered with the SEC, filed, so they’ll be coming soon. This just means that there are more and more out there because the demand obviously is there.

Also, as far as ETFs go, the thing that is interesting to me is these speculative ETFs are gaining a lot of volume. So that just basically says, yes, there’s demand. It doesn’t matter whether it’s institutional, whether it’s retail – there’s demand for speculative positioning in the big names especially, but some of the lesser names too. But really, it’s the big names that are getting most of the volume.

So pretty exciting stuff, except when it comes to speculation, we see last week the meme stocks are back in a big way. Yes, speculation is back in a big way. Risk-on leveraged is back in a big way. And that’s all good.

Even if you look at the market at 23 times multiple, 23 times PE on the S&P – well, that’s lofty, people. But valuation, excessive or stretched valuations, has never been a reason for stocks to tumble or for them to even correct. After the fact, people mention, “Oh yes, and of course it makes sense because we were stretched in terms of valuation.” But a lot of speculation out there, a lot of money coming off the sidelines, passive bid keeps getting stronger, volatility is down.

The VIX is sporting a 15 handle, so we see risk parity funds come in and buy equities. So pretty good-looking setup for equities this week. Now, what we got this week? We got huge stuff happening this week.

Big takeaways here. We’ve got Meta and Apple and Amazon and Microsoft reporting – almost 20% capitalization of the S&P 500 tech stocks are reporting this week. So, going to be a big week. I don’t expect any of them to disappoint.

I expect them all to do well. Maybe guidance will be a little tepid, but I think the investors are going to be watching. I mean, you should be watching. We all should be watching what their capex is going to be on AI.

And if the market likes the fact that they’re spending more, as the market liked the fact that Google said they were going to spend more last week, then these stocks can go higher.

Earnings have been knocked down a little bit – expectations, consensus have been knocked down, so it’s an easier bar to beat. So if they beat, that’s a positive for the markets. We have the Federal Reserve meeting this week. I don’t think the Fed’s going to raise rates, but there’s always the possibility – excuse me, lower rates.

They’re definitely not going to raise rates. There’s always a possibility. Not for political reasons, but maybe for whatever other reasons they might put out there, including some of the internal dissension at the Fed, that maybe they give us a 25 basis point cut, which would be completely unexpected, in my opinion, and that would cause markets to rally. Because it’s like, okay, the Fed has just pulled the lever, and they want to lower rates.

We know they want to lower rates, but are they actually going to do it? If they do, that’s the surprise that could happen this week. I don’t think they’re going to. It would be a surprise, and I think the markets would take that probably as okay.

Maybe it’s political pressure. Whatever it is, if they’re going to start cutting, rates are going to come down, that’s going to be energizing, and the market will likely go higher. I don’t think the market will react negatively. Some of the theories out there are, if the Fed cuts, markets might get nervous, saying, what do they know that we don’t? Is there something wrong?

So, let’s go with, hopefully, a surprise, but I doubt it. I think a nothing burger from the Fed is just going to have markets move higher anyway.

Besides earnings this week, besides the Fed, besides the big mega cap tech names, about 152 S&P 500 companies are reporting this week. It’s a big earnings week. And the takeaway from that is if the market moves higher on these – maybe they’re mixed, maybe they’re all good, they’re never all good – but if the net-net is the market is okay with the earnings, better than okay earnings will mean likely higher. And on Friday, we got payrolls. So it goes from zero – the analyst at Santander has zero, in other words, zero non-farm payrolls added, zero – up to I’ve seen 150, but the average is about 109 to 114 because there are a lot of numbers out there. There are a lot of analysts predicting what non-farm payrolls would be on Friday.

I don’t have a number. I’m going to guess between 75 and 110. So that’s just a wide range – you can drive a truck through that – but it’s not something that I follow closely in terms of modeling. But I’ll say this about that: if the number is reasonable, the payrolls added are reasonable, and I’d say north of 100, markets are going to like that too.

The only thing that might upset markets this week on Friday is a really horrible non-farm payrolls number. That might be like, wait a second, this is something we don’t know. But then, the idea that the Fed is going to have to cut will likely come in. So, guess what?

The takeaway from what’s happening this week is likely all to be positive for the market. We got another leg higher. The only thing that worries me about another leg higher in the markets is, yeah, things are getting frothy. Things are getting a little bit irrational in terms of stretching valuations, in terms of just speculation.

Plenty of money on the sidelines that can come in. So I think we do get another leg higher. It’s just one of those markets, one of those bull markets where you get a little nervous because the higher you go, the more nervous you get. But it’s all good. The takeaway from all this is, keep on trucking because stocks just look like they want to go up.

Catch you guys next week, cheers.