The Best Of All Possible Worlds

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As I suggested on Tuesday, the stock market is thinning out dramatically. While the major indexes continue to go up on a daily basis because of mega caps like Nvidia (NVDA) and Apple (AAPL), beneath the surface more and more stocks are falling by the wayside. For example, while NVDA has gone parabolic and AAPL has exploded higher in recent weeks, notice how the S&P Equal Weight (RSP) and Russell 2000 Small Caps (IWM) are going sideways.

Thursday was typical with 2489 stocks on the NYSE and NASDAQ advancing while 4,556 declined – almost 2 decliners for every advancer. And yet the S&P was +0.23% and the NASDAQ +0.34%. The NASDAQ-100 (QQQ) was +0.54%. According to Jason Goepfert of Sentiment Trader, this was the first day since the inception of QQQ that it was up more than 0.5% while at least 40 more stocks declined than advanced. This is exactly what you see at market tops……

We think Oracle shares have been bid up more on deal-win headlines, total RPO figures, and the AI excitement wave, without a very deep analytical framework – JP Morgan Analyst Mark Murphy, quoted in Dan Gallagher, “Oracle’s Bright Artificial Intelligence Future Outweighs Its Present”, WSJ 6/13

Also strange are the enormous pops some big tech stocks are getting this week in response to ordinary earnings reports. Oracle (ORCL) had a huge move on Wednesday, Broadcom (AVGO) today and Adobe (ADBE) looks poised to rocket higher tomorrow (Friday). BofA is now calling for AVGO to be the next $1 trillion stock. And yet a close review of the reports reveals nothing special: moderate revenue growth, marginal increases in full year guidance, etc…

To believers this is the best of all possible stock market worlds. Consider me Voltaire to their Leibniz…..

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