Fade to Nowhere

I have lost count of how many fades we have seen the Nasdaq this year which, inevitably, led to nowhere. Specifically, failed bearish reversals are the hallmark of a bullish melt-up, practically by definition. One expects it, even if one is a steadfast bear. 

However, at a certain point it becomes comical. And this market, what with its propensity for historical outliers, clearly pushes those boundaries in ways other melt-ups have not. As we speak, for example, the Nasdaq is well off session highs, especially the semiconductors. Quite a few prominent chips, such as MU and NVDA, did not make new highs of late when the Nasdaq did, which qualifies as a bearish divergence to track. 

All of this is happening as a new earnings season kick into gear, with another enormously high bar for the "Magnificent 7" names to clear--Netflix gets the party started for mega cap tech this Thursday evening. I am convinced that the law of large numbers finally catches up to these leaders this earnings season with a dose of reality. 

Elsewhere, gold, silver, and their miners continue to defy many calls for an imminent, sharp downside reversal. What is most noteworthy about this group is that they normally feature stomach-churning rug-pulls and corrections for even the toughest of gold bugs to endure.

And, yet, this time around the consolidations have been remarkably cool and calm, which I consider to be rather bullish.  

Finally, oil stocks are waking up even as oil itself is red. This is a rare circumstance and perhaps indicative of a much overdue rotation into commodity stocks, out of favor and cheap, versus the extremely crowded and extremely rich growth tech mega caps. 

Ultimately, bears need a fade to somewhere, rather than nowhere. But the selling into strength by the Nasdaq and semis also should not be dismissed as a bearish omen.