From the Market Ear:
Déjà Vu All Over Again
Markets are roaring, but the setup is eerily familiar. A 35% global rally, AI mania at hedge-fund extremes, and S&P concentration at record highs. History warns: every time RSI held this long, stocks fell two weeks later. The market set-up screams that there finally will be a trade-able short-term pull-back but are the echoes of 2000 signal that this could be the start of something bigger?
Echoes of 2000
The 35% global rally since April lows echoes the 2000 TMT bubble.
Fast & Furious
The Mag 7 ETF MAGS is now up 60% since the April 8th low.
AI positioning
“Positioning in the AI theme is getting crowded – we estimate a 9 out of 10 within the hedge fund universe via the lens of Mag7 and US AI Beneficiaries….managers have net bought global Info Tech stocks for five straight weeks and at a near record pace.”
The last time resulted in the dot-com bubble
Starting a rate cut cycle with double digit earnings has only happened once in past 40 years.
Much more than 2000
The S&P 500 has never been more concentrated in just ten stocks than it is today with the biggest U.S. companies representing over 38% of the index.
0.1% to go
Got to take out that 2000 high.
Gross goes parabolic
20% higher than when the year started and now at 100th percentile on 1, 3 and 5 year look-back.
Lower every time
The S&P 500’s RSI has stayed above 45, for 102 straight days — one of the longest streaks in history. In the past 60 years, the S&P was lower EVERY time 2 weeks later.
Sell Rosh Hashanah, buy Yom Kippur
Dates are Sep 22nd i.e. this Monday and October 1st, respectively. It coincides also with post option expiry reversion effect the same week and Sep month end pension selling due to run up Sep MTD and start of buyback black-out.
