It was tough sledding yesterday as money fled the hottest Technology (XLK) and Communication Services (XLC) names and flooded into the laggards – mostly software, which dominated the top advancers list.

A Run for the Ages

It's been a run for the ages.  Since the March 30^th low, Mag Seven names have set a blistering pace, even rallying on increased capex and spending announcements, which were supposed to be reasons to sell them.

This flip-flop about the rally and the AI Trade has been remarkable to witness. I’m used to analysts being very wrong, but so many “mavens” that warned about a lack of ROI and circular financing have come around. Case in point: Paul Tudor Jones is buying AI stocks after sounding the alarm for the last two years, warning of a giant market crash. Now he sees a year or two for some names to continue their scorched-earth pace (see chart).

My timeline is longer, but I get worried when the experts get on the same side that I have been on for years.

Too Hot to Handle

Speaking of scorched earth, the hottest global trade took it on the chin yesterday.  One of the biggest challenges has been riding the waves of these stocks.

These trades are not done, and buyers will emerge on dips. Some will be better as trades than investments, but even if you are buying the long-term proposition and willing to deal with extreme volatility, make sure you are wearing your dancing shoes.

 

Today’s Session

Speaking of hot – April jobs came in at 115,000 against the consensus of 62,000.  April was on the cusp of being a great report, save for average hourly earnings growth, which continues to slide and at +0.2% came below the consensus of +0.3%.

This is an issue with inflation ticking higher and will result in some slowing of consumer activity in the near term.

Other concerns:

• Part-time work for economic reasons: +425,000
• Labor force: -92,000
• Professional Jobs only 7,000

Highlights:

• Transportation and warehousing: +30,300

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