The fiercer the surge, the greater the risk. The AI market has already shown signs of a "rising crash"!

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The higher the market goes, the more dangerous it becomes—this is not the intuition of pessimists, but a warning from Bank of America’s quantitative model.

U.S. stocks are currently in a rare moment: indexes are hitting record highs while volatility is also rising. This combination of “rising prices and rising volatility” is often a typical feature of the bubble phase in history.

This week, the market will face two major concentrated tests: the FOMC rate decision and earnings reports from five of the “Big Seven Techs”. The overlap of these two forms the most intensive trading catalyst window recently.

“Upward Collapse”: The Harder the Rally, the Higher the Risk

According to Chase Trading Desk, the bank’s derivatives strategy team (analysts including Nitin Saksena) raised a striking judgment in their latest report:

Nasdaq has gone up for a record 13 consecutive trading days, achieving nearly 25% volatility, approaching historical highs—S&P 500 gains are even comparable to those during the COVID pandemic, but without undergoing the same level of market stress beforehand. This “upward collapse” dynamic matches our prediction for a bubble market in 2026.

What is an “upward collapse”? Simply put, it means prices surge rapidly while volatility does not decrease but rises—in other words, the market is celebrating while insurance costs also climb. This usually indicates participants are not calm internally, and disagreements over direction are intensifying.

What’s more worth watching is the AI sector. The report notes that “bubble risk indicators” for AI-related assets such as semiconductors have reached their highest levels since ChatGPT was launched. During last week’s market surge, stock volatility not only didn’t decline, it was actually supported—another proof of bubble dynamics.

What will Powell say this time?

On April 29 (Wednesday), the FOMC will announce its rate decision. Analysts wrote:

The Fed will resolutely stay put at the April meeting. Inflation risks from the Iran war have not yet dissipated, and labor market data has improved. Powell is likely to deliver a hawkish signal at the press conference.

Three key points: First, whether he is open to further rate hikes; second, how he assesses the economic impact of the war; third, whether he will highlight the recent rebound in the labor market.

On the data side, analysts forecast Q1 annualized GDP growth released April 30 at 2.4% (market consensus is 1.6%), with core PCE year-over-year at 3.1%. Inflation remains high, which is Powell’s fundamental reason for not turning dovish.

Earnings from Five Tech Giants: All Expected Above Consensus

This week, the market is most focused on the concentrated earnings reports from five “Big Seven Techs.” Analyst forecasts for all five are above market consensus.

Meta (April 29) Analyst Justin Post projects Q1 revenue/EPS at $56 billion/$7.44, above consensus of $55.4 billion/$6.64. The drivers are AI empowering core ad business and continued cost control. The biggest near-term risk is macro uncertainty affecting Q2 revenue guidance, or further increases in AI infrastructure capex.

Amazon (April 29) Justin Post projects Q1 revenue/EBIT at $178.4 billion/$21.4 billion, above consensus of $177.1 billion/$20.7 billion. AWS growth forecast is raised to 28% year-over-year, above market consensus of 25%, partly driven by Anthropic-related revenue.

Alphabet (April 29) Justin Post projects Q1 revenue/EPS at $92 billion/$2.69, slightly above consensus of $91.7 billion/$2.66. Integration of the Gemini model is expected to drive search and cloud business above expectations, search revenue growth expected at 18%.

Microsoft (April 29) Analyst Tal Liani projects EPS at $4.05, slightly above consensus of $4.04. The key points are Azure revenue growth (as AI computing power comes online), Copilot paid seat expansion, and the stability of non-AI business.

Apple (April 30) Analyst Wamsi Mohan projects Q2 revenue/EPS at $113 billion/$2.00, above consensus of $109 billion/$1.93, primarily supported by strong iPhone sales.

This Week’s Market Calendar: Highest Volatility on Thursday

Based on SPX implied volatility data, here is the expected volatility for each trading day this week:

Thursday (April 30) is forecast to be the highest volatility day this week—PCE inflation data and several tech giants’ earnings reports will be released on the same day, meaning a huge amount of information.

Faced with the “upward collapse” market environment, the analyst team offers specific hedging ideas:

Call spread options on QQQ and VIX call spread options benefit respectively from currently attractive skewed entry points, and can hedge recent right-tail and left-tail risks.

The logic is: the current options skew structure provides a relatively cheap entry opportunity—use QQQ call spreads to hedge against the risk of continued market rallies, and VIX call spreads to hedge against sudden market collapses. You need to prepare for both directions.

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The wonderful content above is from Chase Trading Desk.

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Risk Warning and DisclaimerThe market involves risk, investment needs to be cautious. This article does not constitute personal investment advice and does not take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions in this article fit their specific situation. If you invest based on this, you do so at your own risk. ```