Momentum looks to be waning after the US stock market powered through one of the most outstanding rallies in its history over the last five months during which the S&P 500 gained over 28%.

While a bit of a breather is to be expected to bring overly exuberant sentiment and one-sided positioning back to sustainable levels, such lasting momentum bursts tend to carry on for quite some time.

A persistently low volatility regime across all major asset classes is a strong tailwind, as it causes ample liquidity and higher leverage levels across the financial system.

This makes the current environment increasingly reminiscent of 2017 or 1995: A long, smooth uptrend with shallow, temporary consolidation periods.