What a strange, strange market we are in. One would think the market would be getting pounded on a daily basis, but just the opposite is happening lifetime highs every single day except for weekends. I am delighted to state that my shorts are holding own beautifully in the face of this, which actually makes a certain amount of sense since the breadth of the market is awful.
The tech stocks just keep muscling to lifetime highs, and the absolute tidal wave of earnings that we’re going to see on Tuesday, Wednesday, and Thursday evenings will either justify these valuations or, at long last, start to punch these prices in the nose.
Although it isn’t an index chart, I wanted to share Nvidia’s, since it broke out of a range it has been trapped in for about ten months. NVDA is far and away the most valuable company on the planet, and if the AI Fever ever, ever breaks, you’re going to see a wipeout that makes the Great Financial Crisis look like an episode of Mister Rogers’ Neighborhood.
Weirdly, NVDA’s huge day and massive breakout wasn’t enough to push the semiconductor index any higher, even though NVDA is (obviously) its largest component by far.
There are a couple of big indexes which seem to have glued themselves to their trendlines, suggesting some kind of stasis or equilibrium. Here we have the Dow Utility Index, which would put a school bus of ADHD kids to sleep.
We also have the small caps, which have spent the past seven days lingering precisely on the lower trendline of its former channel, having absolutely no idea what it should do next.
The tale of the past two months is as plain as day, and it has played out across all markets:
- ascent;
- beautifully formed-top;
- the beginnings of a breakdown;
- a five-foot steel rod rammed up the backside of the bears in the form of a mega-rally which has been going on since the end of March.
Of course, I need to mention Bitcoin, since this is my North Star in this entire endeavor. The analog is holding up beautifully, although it sure gave me a scare Sunday night. We need to see this continue to weak, and for that weakening to accelerate. Get that, and everything else will fall into place.
