Michael Burry maintains short bets as S&P 500 rally nears potential market top

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Burry warns S&P 500 peak

Highlights

Michael Burry maintains profitable short positions against iShares Semiconductor ETF, Micron, Nvidia (currently at a loss), Caterpillar, Palantir, Tesla, and Applied Materials, warning markets could be nearing a major top.
The S&P 500 climbed 1.9% on Tuesday to its first record close since June, driven by strong corporate earnings and declining oil prices, with Nasdaq gaining 2.7%.
Burry cautions that falling volatility is fueling leveraged momentum strategies, amplifying risk of a severe downturn if a reversal occurs, especially given concerns over AI-fueled demand sustainability.

Burry warning and current short positions

As reported by CNBC, Burry said in a Tuesday Substack post that he still believes markets could be nearing a major top even as the S&P 500 continues to climb. He wrote that new highs in the benchmark index are likely to pull additional capital into equities, even while he sees the risk of a steep downturn.

Burry, known for his early bets against the U.S. housing market before the financial crisis, says he continues to hold short positions in the iShares Semiconductor ETF, Micron, Nvidia, Caterpillar, Palantir, Tesla and Applied Materials. He adds that he remains confident in the long-term case for those trades, although he says he would cut losses if the positions move decisively against him. According to his post, all of those trades remain profitable except for his position against Nvidia.

He also repeats that short selling is unsuitable for most investors. In his words, he says he must short, while most market participants should not.

Rally dynamics and broader market implications

The S&P 500 rises 1.9% on Tuesday to its first record close since June, helped by stronger-than-expected corporate earnings and another drop in oil prices as hopes grow that the Strait of Hormuz could reopen to maritime traffic. The Nasdaq Composite gains 2.7%, extending its advance in the first two days of the week to nearly 5%.

Burry has been one of Wall Street’s more vocal critics of the artificial intelligence boom, arguing that demand for AI infrastructure is being supported by financing arrangements that may not prove sustainable. He says falling volatility is reinforcing the market’s advance by prompting volatility-targeting funds and other momentum-driven strategies to add leverage, increasing the risk that a reversal could become more severe.

In our earlier article on the S&P 500’s record-high breakout, we broke down why U.S. stocks surged as multiple catalysts aligned, including easing Strait of Hormuz concerns, strong earnings expectations, and a technical push through key resistance. We also highlighted how technology leadership—especially the sharp jump in the iShares Semiconductor ETF (SOXX)—helped amplify momentum and support a broader rotation back into growth.

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