The Pendulum Swings

I had a friend who used to urge patience when I expressed frustration about unfair conditions that seemed to linger forever. He would say, “At some point, the card changes.”

It's rich to hear Tim Cook complain about the price of memory and storage, which have forced Apple (AAPL) to raise its prices. Micron Technology (MU) begged Apple to fork over more cash for these chips a few years ago and told Cook that his ham-fisted approach left no funds to expand capacity.

Yesterday, the market struggled on the surface, even as more than 60% of the S&P 500 (SPX) finished higher. What wasn’t translated was the exact change in market cap between producers and memory consumers.

Rotation & Bumps in the Road

With “Mag Seven” in big trouble, rotation will look choppy, signaling weakness in major indices. Yesterday saw a few inexplicable wobbles, as influential software names went into free-fall.  But momentum held up and served as a bridge, with quality delivering one of its best sessions in a long time.

There is no doubt that quality has lost enough ground to momentum (SPMO) names, but an exact reversal of fortunes might be obscured by negative prints for large indices.

Extreme Buy Signal?

The Fear & Greed Index in “extreme fear” is supposed to signal stocks that are a buy here, although it usually gets deeper as “fear begets fear.”

Headlines and developments in the Middle East could also shift the narrative quickly.

Today’s Session

Asian markets fell overnight, which always adds pressure to hot tech names in our markets, but the report that OpenAI might delay its IPO is also causing jitters.

The sub-headline is misleading. The SpaceX IPO has followed an established script, nothing unusual there, and the notion that a company would cancel an IPO when they need money is dumb.

Pressure on tech will trigger some profit-taking and possibly continued rotation. Also, most of today’s sellers will be tomorrow’s dip buyers.

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