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Rocket Launches Fire Across Tech Space

When rocket green flares fly across the space, it is so hard to chase in terms of risk management. Friday’s example of Marvell (MRVL) moving 40% in a week after Nvidia (NVDA) lit the fuse one day earlier is amazing to watch.

Friday saw the Nasdaq 100 soar by more than 2%. The Nasdaq is up 7% on the month!

It sure feels like understanding macro technical analysis is a waste of time this month. An index of large cap stocks that hold CRM, AAPL, MSFT, CSCO, INTC, IBM is making lower highs for three weeks now, and the low was a 7-week low.

In my newsletter, I always insert a picture hinting at something going on. A sunset, a sunrise, a storm or a rainbow, they all convey a message. Last week, I posted a picture of a ladder, a narrow advance going higher. This week, Nvidia rocked the world with optimism around AI. After that announcement, we have seen the whole AI list of names shoot higher.

However, there was a wider response through some different industries on both Thursday and Friday. Names like Adobe, Workday, and Monday, in the technology sector, are joining the party.

IBM, the owner of the AI tool Watson, with ads that we had seen for years, is finally getting a bid, up 2%.

Goldman Sachs (GS) is trying to change the chart shape from down to potentially up. Near 8-week lows to start Thursday, it is now making 3-week highs.

You see credit card debt exploding, and American Express (AXP) is going higher, breaking a downtrend.

Looking at so many pieces of macro information, it seems so odd. Below is the Shanghai Composite ($SSEC), breaking down to 4-month lows after making fresh highs in early May.

The Hong Kong Hang Seng ($HSI) is worse.

The UK ($GBDOW) is stalling out.

Germany ($DAX), the economic engine of the Eurozone, is also stalling out.

France ($CAC), one of the best performing markets on the back of high luxury products, is rolling over.

I could post a few more, but it comes down to one thing in my view.

America is the easiest place to invest in the AI trade, and that could garner inflows. It is also a country with a lot more technology companies that have come through the Silicon Valley incubator. Bringing the semiconductor manufacturing on shore is a big deal, and semi’s are clearly leading the way. How much it broadens out into other sectors and industries remains to be seen.

Can financials, discretionary and energy turn up to join them? Maybe it doesn’t matter and we should avoid our technical bias and run with the church of what is working. Software and semiconductors are working. As big companies in the $SPX and $NDX, they continue to drive the indexes higher. Perhaps another leg has just begun.

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