Magnificent Seven Leaders Gain Even More Momentum
The difference this time was it didn’t cover up broader weakness in the rest of the market.
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Big-cap technology stocks have been leading a narrow market advance for several days. On Wednesday, they gained even more momentum, and this time, the broader market action improved.
The entire market performed well, probably due to poor positioning and a high level of gloom. Many market players have been worried about slowing economic growth and narrow action, but they were caught leaning the wrong way as Nvidia NVDA surged to new all-time highs and helped propel the entire big-cap technology sector.
Some market participants have been concerned that a rally in bonds was signaling a slowing economy and a weak May jobs report. That rally continued on Thursday, but equities didn’t pay any attention.
Breadth was quite strong, with around 6,600 gainers and 2,600 decliners, but what was most notable was that new 12-month highs bounced back up to more than 550 names.
Although the S&P 500 and Nasdaq 100 QQQ hit new all-time highs, 42% of all stocks are under their 50-day simple moving average, and 34% aren’t even over their 200-day simple moving average. The big-cap technology names are hitting a record percentage of the overall market capitalization.
This narrow action has been a theme for a couple of years now, but at least on Wednesday, it didn’t cover up broader weakness in the rest of the market. Even the gloomy small-cap players were buying for a change and pushed the Russell 2000 up 1.5%.
Weekly unemployment claims will be released on Thursday morning, but the next big market catalyst will be the May jobs report Friday morning. Bonds look like they are concerned about a weak number, but equities are fat and happy.
Have a good evening. I’ll see you in the morning.
At the time of publication, Rev Shark had no positions in any securities mentioned.
