Just A Couple Hundred Algomatics Running Around Acting Like Complete Animals
The Window Dressing fuse was lit this week on top of already vertical moves in many darlings.
The underinvestment surrounding the Mid-East crisis was dry timber for a quarter-end match.
No money manager wants to lose their job being overinvested into WW 3, nor do they want to lose their job being underinvested into the end of Q 2.
Enter the 100% Dragons:
NET
RBLX
STX
HOOD
CRDO
FN
AVGO
ASTS
To mention a few—
All up 100% or more since the April 7 bottom.
What do they do for an encore as the new quarter starts?
The Chips led out of the Dip and so no surprise that’s where the steam was this week.
NVDA stuck an all time high.
Even AMD, the FSLR, of chips in that it implodes after every spike, even made up for lost time.
TSM, Taiwan Stilt Master, an all-time new high.
A weekly SMH shows a close-only trend line with a Rule of 4 Breakout
SMH will set a record monthly closing high in June as it tests its weekly all-time high from exactly one year ago.
It warrants taking a gander at the yearlies.
Interestingly the tip of the chip spear, NVDA shows what looks like a one year Megaphone Top.
For all the excitement stocks ended mixed marked by narrow leadership amidst the institutional window dressing.
The DJIA lost 106 points while the SPX closed flat. The NAZ however advanced 61 points thanks to outsized gains in a few mega-cap names.
Once again the Magnificent Seven played the role of market stabilizers. NVDA surged 4.41%, GOOGL added 2.63%,
These names helped offset broader selling pressure that weighed on the vast majority of stocks.
For example leaders that retreated were CVNA, EAT and GEV.
Hit and Run caught the declines in CVNA and EAT that were setup by prior distribution patterns.
GEV left a Gilligan sell signal on Wednesday—a gap up to a new 60 day high with a close at/near session lows.
Market breadth was poor as the Q’s struck an all time high with more than a 1000 net declines on each of the two primary exchanges.
The small cap Rut 2000 index fell 1.24%, and both the NYSE and NAZ McClellan Oscillators and Summation Indices declined, highlighting the underlying weakness that was masked by large-cap strength courtesy of Window Dressing
The normal expectation is that window dressing mark up is likely to persist with the quarter-end just days away as portfolio managers aim to showcase winners in their reports while at the same time wanting to be liquid to beat the rush to the exits.
Of course some big players may cut and run to beat the crowd prior to the July 4th holiday square-out with 1932 flagged in this space a few days ago.
The crosscurrents yesterday were marked by the SPX registering the smallest loss ever in the history of the index.
The SPX was down 0.00033% on Wednesday.
As well the index left an NR 7 Day, the narrowest range in 7 days.
These contractions have an uncanny knack for calling an expansion of volatility in the next few days.
Given that the SPX has run up 340 points in a month (since the May 23 low), I can’t help but wonder that the ensuing expected expansion in volatility will be to the downside with the SPX having kissed the Momentum Peak scored early last December.
In sum the first sign of a top in the SPX will be breakage below the open gap from Monday, 6026.
The next signpost will be breakage below Monday’s outside up day low, 5944.