Rise and shine everyone.
It’s been an interesting few days. We saw the Dow Jones hit an all-time high yesterday, while Small Caps continue to rally on the other end. Finally, the market seems to be broadening out and for the Dow, it’s being led by earnings which is exactly what we want to see.
We talked about small caps yesterday and whether the rally was sustainable, so let’s talk about the balancing of risks here. The rotation out of MegaCap tech is becoming more pronounced now. This has nothing to do with the performance of the MegaCaps but more to do with the relief from potential rate cuts and a possible Trump victory. We’ve long said people were hiding out in these large tech companies, and some of that is unwinding.
On the other hand, we have more and more analysts now becoming overly optimistic about rate cuts. We examine some of that below, along with what’s weighing on Europe and Asia.
US Equity Futures are much lower this morning, led lower by the Nasdaq 100. Mega Cap tech is also under pressure with NVDA leading the way lower at -4% in pre-market trading.
Mayhem talked about July 17 being a local top of for the market in our weekly dashboard…. seems like it’s coming right on cue. Let’s see if this continues.
