The SPY is breaking down right now losing the 100 day for the first time since April. You cannot be a hero and fight this price action. When this breaks, tech is the weakest link. This ai trade has been wobbling for weeks now and this week it seems to finally be imploding. We’ve seen Amazon and Google both shed double digits initially on their prints, we’ve seen multiple smaller names down 20-30%, and the big shocker was Intel just flat out lied to investors about where they were, sinking by 30% at one point today. This is really reminiscent of the 2021 saas bubble bursting. On the positive side you have names like Amazon doing things nobody thought possible a year ago in guiding for 2 years of 40% growth on AWS when they used to guide for just the quarter ahead. Even that wasn’t enough to save the stock from being hit because now you have to think of all the capex involved and how long they will be cash flow negative. We’re just in a new world where nobody has time to “invest” with how finicky investors are and if you’re not performing on short timeframes, you’re going to get kicked to the curb. People don’t have time to wait years for Amazon to inflect positive FCF again and you’re seeing many of them flee the stock. We’ve all seen the seasonality data and how markets are always up after midterms, well right now it seems like Trump is about to ramp the war right after midterms and oil is rising over 104 now which is also pressuring markets. The trend is breaking down now but tech has been very weak for a little bit now. This is a mess in every which way. The ai trade is the most popular trade but it is also the trade you really have to avoid.
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Here are today’s large cap momentum scans. It’s pretty telling none of these are tech names. There aren’t any strong tech charts out there now, again I know it is the most popular sector to trade but for the moment it just isn’t where you want to be.
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