Overbought tech needs a pause
Overbought
NASDAQ and NYFANG at very overbought levels, but people tend to forget we can stay at overbought levels for longer than most can "endure".
Source: Refinitiv
Apple - zoom out...
...and you will see there is no trend in the world's number one stock. Getting excited about break outs, both ways, has been an expensive strategy since late 2021, vision pro or not.
Source: Refinitiv
Tech positioning - getting stretched
Below are a few bullets via JPM's positioning intelligence team:
1. CTA positioning in NDX vs. RTY: The difference between exposure to these two (i.e. NDX – RTY) is at historical extremes
2. Combined Flows (i.e., HF + ETF + Retail): Info Tech has been the most bought sector over the past 20 days.
3. Positioning across sector ETFs, Info Tech’s weight is at new highs.
4. Value vs. Growth – ETF flows & Quant positioning: 3M flows to Value-related ETFs are at a low again vs. Growth-related ETFs
5. HF buying of Mega Cap Tech has rebounded in the past week or so, putting the L/S ratio back to the highest since late 2021
Who's outperforming?
The narrow rally in another pic.
Source: Tier1Alpha
SPX - just doing what it should do
Maybe a simplified version of reality, but the latest uptick in Citi's US economic surprises is adding support to the SPX break out.
Source: Refinitiv
Corporate America is still not sending off alarm bells
1. MasterCard: "...we continue to see a consumer, which is just remarkably resilient, and consumer spending continues to be remarkably resilient..."
2. Wells Fargo: "...from what we see, things still are probably far stronger than we would have thought they would have been at this point in the cycle."
3. Visa: "March, April, May in the U.S. have been pretty much stable, really not much change from what you saw in April into May, roughly 5% growth" (MS sales)
High yield refuses
The HYG moved higher over past days, but the "lag" vs SPY is huge. We have not seen such a big divergence between these two in a very long time.
Source: Refinitiv
Rainy European summer?
EU Equity Strategist, Graham Secker, sees short term pain ahead for the region:
"We expect a 10% correction over the summer months as growth slows and liquidity deteriorates. EPS risks remain to downside. We still prefer defensives > cyclicals and growth > value. Downgrade Financials to neutral. Europe's relative performance looks vulnerable near term, but brighter thereafter."
Source: Morgan Stanley
Still bullish European equities?
Time to rethink that logic...SX5E vs CESI Europe gap is huge.
Source: Refinitiv
See TME's daily newsletter email above. For the 24/7 market intelligence feed and thematic trading emails, sign up for ZH premium here.
