Remember When This Was an AI Play? It Just Made a Nearly 3-Month Low

I promised myself I would not say anything about the SOX today. Because really, what hasn’t been said about how stretched it is? As I noted the other day, if you haven’t seen a hundred charts showing how concentrated and SOX-stretched this market is you probably haven’t been paying attention.

Yet I do want to point out that the SOX did not make a higher high on Wednesday. Now it may very well do so on Thursday, but for all the hoopla on Thursday, it fell short of making a new high.

And I know everyone talked about the bonds on that very hot print for the PPI, but quite frankly interest rates barely budged for such a hot print.

But you know what has changed during this tech rally? The Utes. Remember when the Utes were an AI play? And here we are, with the AI stocks hot as can be, yet the Utes are down 8% since early April.

You cannot say "but Utes care about interest rates" when a few months ago folks said they didn’t care about rates, they cared about AI. Of course this is the reason I don’t do narratives because stories change like this all the time. In any event, the Utes made a nearly three-month low on Wednesday. And no one seemed to care.

I really wanted some fussing over the Utes because while that line isn’t the best line I have ever drawn (it’s actually pretty poor) I thought if we saw the Utes touch this line folks would be screaming, and yet nary a word. The Utes are getting pretty oversold so I’d love some hysteria about them. Maybe because everything is so droopy, it’s hard to pick one group out.

The number of stocks making new lows continues to expand. The Nasdaq’s are now just over 230. A week ago they were 115, so the Nasdaq’s new lows have doubled in a week. The NYSE has also seen quite a pick-up in the new lows as it now stands at 113. A week ago they were 33.

The McClellan Summation Index, which has been hovering on the flat line for a few weeks now (likely mirroring your portfolio if you aren’t loaded up with semis/tech) finally rolled over enough that even my bad eyes can see it. It will now require a net differential of +1,600 advancers minus decliners on the NYSE to halt the decline.

If you still feel you need to squint to see that, then take a look at the cumulative advance/decline line (blue) as it is on the verge of breaking to a minor lower low. The issue is that this recent low came when the S&P 500 was at 7200. So we have the S&P up 300 points and breadth flat. What a different scenario for the market just a few months ago when breadth roared and the S&P stagnated.

I am still waiting for a bout of volatility now that we are intermediate-term overbought, but the only place we see any shaking up is in the 493 and they really aren’t shaking, they are mostly just drooping.