Independent economic research and investment strategy firm Variant Perception (VP) has shared its latest market musings, and the phrase “generational equity top” got a run.

The equal-weighted Value Line Arithmetic Index is drawing down from its August high, while the Nasdaq 100 is rallying…

Graph 1. U.S. equities (Jan 2025 =100)

Source: Variant Perception

…and the U.S. Equity Cumulative Advance-Decline Line has also dropped back to its spring lows, even as the S&P 500 holds near the highs.

Graph 2. S&P 500 vs U.S. equity cumulative advance-decline

Source: Variant Perception

That means more stocks are falling than rising, even if the index is up. When narrowing leadership occurs alongside monetary tightening, VP says it is the classic combination seen ahead of generational equity tops.

Today is the first time in this cycle we are seeing both. For what it is worth, my view is the failure of the Firmus Initial Public Offering (IPO), and the Anthropic and OpenAI IPO deferrals, suggest liquidity is running dry, and public equity markets are running out of buyers.