Magnificent Seven Logs Another Great Day Despite Nvidia Weakness
The Fed's next interest rate decision is going to drive some big shifts in the market.
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Overall, market breadth improved slightly on Monday, but it was still quite poor. The S&P 500 had negative breadth for the 11th straight day, with only about 180 of the 503 stocks in the green. The Magnificent Seven MAGS stocks had another great day and gained 2.3% even though Nvidia NVDA was solidly in the red.
There are some pockets of small-cap speculative action in quantum computing and names like Quantum Computing QUBT and IonQ IONQ, but breadth in the Russell 2000 was around even. Biotechnology names bounced a little, but they are still struggling.
The disparity between the Magnificent Seven and the rest of the market is setting various records and has already continued far longer than many market players thought possible. The great likelihood is that the Fed interest rate decision on Wednesday is going to shake things up. This lopsided action cannot continue that much longer, especially with the end-of-the-year positioning and tax moves coming into play in the next two weeks.
The action in the stocks outside of the Magnificent Seven is favorable for a Santa Claus rally to end the year, but the very frothy action in the big-cap technology names is causing an odd mix of sentiment. On the one hand, there are folks calling this bubble action because the QQQ is parabolic, but then there are others talking doom and gloom because of the lousy breadth.
The Fed interest rate decision is going to be a great excuse for some big shifts in the market, so be ready.
At the time of publication, DePorre was long NVDA.
