The most vocal optimists are getting skeptical of the never-ending stock rally.

What once seemed sensible is starting to baffle even them. The S&P 500 is up 39% in 50 days and in the midst of its longest winning streak since February. A flattening virus curve, Federal Reserve stimulus and reopening plans explain a lot of it, they say. But with $7 trillion in value created and the Nasdaq 100 near a record, many big bulls are sounding distinctly...bearish.

The S&P 500 rose 1% as of 12:15 in New York. Here’s what a few investors who believed in the rally now have to say:

Stranger Things
Peter Tchir’s bullish pronouncements amid the recent rebound have largely borne out. But for the head of macro strategy at Academy Securities, explaining why stocks keep going up is getting harder. Though the S&P 500 hasn’t yet breached 3,200 -- Tchir’s near-term target for the index, which he raised from 3,000 just last week -- he’s considering throwing in the towel nonetheless. His list of concerns include the escalating tiff between the U.S. and China, which is likely to escalate, the likely arc of of re-openings, and diminishing prospects for new stimulus. Tchir remains bullish but is reducing risk, he said on Wednesday.

“Normally I’m right there alongside whoever suggested tequila shots at midnight, but today, I’m going to quietly grab my jacket and leave before anyone notices I’m gone,” he wrote in a note. “Today has that feeling in the market. Bears capitulating left, right and center. I am not going to be fully short, but I am strongly in favor of reducing risk positions across equities and credit.”

Aggressive Assumptions
The market’s rally has been surprising but not unthinkable considering the fiscal and monetary measures already unleashed. But stocks have yet to start discounting what’s turning out to be a long list of worries, says Ralph Bassett, head of U.S. equities at Aberdeen Standard Investments, which has about $644.5 billion under management. Exogenous shocks, including a potential second wave of infections, could pose risks. His team is looking at tweaking their allocations but it’s proving difficult: sectors that could benefit coming out of a recession have already gotten expensive, he said in a phone interview.

“It just feels like markets aren’t discounting in risks to the downside at this stage -- at least to a meaningful degree,” he said. “You can certainly justify a lot of the rebound, particularly in cyclical stocks, but the assumptions to get there are aggressive in our view.”

Burgeoning Skepticism
Three days before the stock market bottom on March 23, Pacific Life Fund Advisors upped its exposure to risk. The Newport Beach-based money manager has remained optimistic since, but is now growing dubious.

According to Max Gokhman, Pacific Life Fund Advisors’ head of asset allocation, the firm’s “burgeoning skepticism” is a function of two developments. First, while economic indicators including jobless claims and PMIs are indeed improving, they aren’t accelerating at a rate that would back a V-shaped recovery. Also, new negative catalysts have emerged, from riots to U.S.-China tensions.

“Investor’s favorite horror franchise of the last two years is back -- Trade Wars: Return of the Tweet,” said Gokhman. “We start to see asymmetric risks to the downside with the S&P above 3,200, or just 200 points off its all-time highs.”

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