Thar Everything Blows!

Yesterday we noted the blow-off nature of the move in Sandisk, a virtual straight line higher for all of April so far and up more than 70% since the late-March lows. Before that, of course, SNDK had been as hot as any stock in the entire market since last summer. alongside the likes of LRCX MRVL MU in the memory segment of AI chips. 

And now today we have, what seems like, the culmination of virtually unheard of vertical moves higher over the last ten sessions in the Nasdaq at-large and semiconductors. To reiterate, whatever your view on Iran and oil may be, we have a brand new earnings season starting in earnest with some still-remarkably-high bars for these mega cap tech names to clear in the coming weeks. So unless we see blowout earnings across the board this hopeful rally has effectively undermined the "sell the rumor, buy the news" setup bulls had previously been planning for just a few weeks back in late-March.

Beyond that, the fast and furious nature of this rally has been met with open arms by just about everything banking house on Wall Street, with the prominent ones cheering it on and goading retail to buy with both fists. Understandably, very few people who did not play for or call this rally (yours included) are of the mind to call it out for being a head-fake. 

You may also recall that the Dow Jones Industrial Average set off February highs, with a bonafide contrarian bearish signal from former AG Pam Bondi bragging about the 50,000 big, round, number at an Epstein hearing on Capitol Hill. Despite the S&P, semis, and Nasdaq being at or near the prior highs, the Dow still has work to do, as do the Magnificent 7 names found in the MAGS ETF. There is some overlap between Mag7 and the Dow. of course. But the tens of trillions in market caps between them, in aggregate, make their performance here all the more significant.

Overall, the current rally has flipped sentiment, positioning, and expectations in an extremely short period of time as we embark on earnings season and, oh by the way, a likely new Fed Chair (which the market loves to test) later this spring amid persistent inflation.

The supply shocks from the Iran War, if you know your history from 1973-1974, may just be starting rather than winding down, which means the "baked in the cake" view of markets missing the mark: The oven has barely been preheated.