Michael Burry Warns Market Near a Major Top, Eyes 1987-Style Fall

Michael Burry is back on the bear horn. The Big Short investor is sticking with his bearish wagers even as the S&P 500 surges to a record high, warning that the rally could still end in a sharp sell-off reminiscent of the 1987 stock-market crash.

What Burry actually said

“I continue to believe it is possible we are near a major top, and possible a 1987-type fall,” Burry said in a Tuesday Substack post. He added that new highs on the S&P 500 will likely pull fresh money into the market before any reversal.

The post landed after the S&P 500 reached a record closing high Tuesday. Burry is not calling the top on price alone, he is pointing to internals.

The positions behind the call

Burry rolled his Nvidia put options to June 2027 and extended his bearish position against the Invesco QQQ Trust to February 2027. The changes also make the portfolio difficult to characterize as uniformly bearish. Closing Oracle shorts removes one downside position, while exiting Microsoft calls removes bullish exposure.

His disclosed bearish positions include Tesla, Caterpillar, Applied Materials, the VanEck Semiconductor ETF, Nvidia and Micron, opened on 30 June 2026 and added to on 24 July.

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Why he thinks the tape is fragile

Burry cited research from BTIG strategist Jonathan Krinsky showing that the S&P 500 had gained approximately 5% over four sessions before reaching its new high, a pattern that had occurred only three other times over the previous 30 years. Those prior instances lined up with major turning points, including the dot-com era.

Burry said, “What really matters is the SOX, and the Momentum trade,” adding that those trades were hit hard in July. He said the key question is whether they can regain market leadership, while pointing to the six-month, 30-minute chart of the SOXX ETF as showing momentum turning back to the upside.

The investor expects fresh market highs to attract additional inflows as lower volatility encourages systematic and momentum-driven funds to increase leverage. Translation: the melt-up could keep going before it breaks.

The context of Tuesday’s rip

The S&P 500 gained 136.02 points, or 1.8%, to close at a record 7,736.52 on August 4. The Dow Jones Industrial Average rose 1.7% to 54,085.88, also a record, while the Nasdaq Composite jumped 2.6% to 26,584.99, according to the AP News.

Palantir shares surged 29% after the company reported stronger-than-expected earnings, producing the stock’s largest one-day gain since February 2024.

Options market and stocks to watch

Traders should watch how Burry’s book maps to flow in the names he is targeting:

NVDA: Watch for put activity and skew shifts as Burry’s puts now run to June 2027. Any semi-cycle wobble hits here first.

QQQ: Burry extended bearish exposure into February 2027. Watch for hedging flow if breadth deteriorates.

TSLA: A disclosed short. Watch for downside flow into any momentum stall.

PLTR: After a 29% earnings pop, watch for whether momentum funds add or fade the move.

MU: Another Burry short. Watch semi-related flow tied to the SOXX leadership question he flagged.

For more context, follow other market news as positioning develops.

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