Last weekend I did a weekend update with the title “The Theme For The Stock Market Rally Is Now AI And It Is Pure Hype.” On this past Thursday NVDA announced earnings and in a conference call its CEO predicted that AI would generate massive chip demand. The next morning NVDA stock gapped up over 20%, helping to push the Nasdaq higher. The higher prices produced more predictions for future price gains on the financial TV channels and provoked stock traders to chase the action in rallying big cap tech stocks.
Take a look at the NVDA chart.
The two most actively traded stocks on Fidelity for almost every day this year have been TSLA and NVDA.
The move in big cap tech stocks helped drive the Nasdaq higher last week.
It looks like the Nasdaq is likely to take back 50% or 2/3’s of its losses from the 2022 bear market attack on this rally.
However, most stocks are now doing much worse than the Nasdaq, as the market is becoming dependent now on a about 20 big cap tech stocks for all of the gains for the S&P 500. Take a look at the NYSE composite and contrast it with the Nasdaq.
You could say that it is droopy.
Go on the financial websites on Monday afternoon and you’ll likely see multiple headlines talking about AI.
That is what the meme of the moment is in these markets and those are the stories that the internet algorithms are pushing now, because it is what people want to hear. Youtube videos geared towards bullish AI talk are now going pushed to the audience of financial video watchers, because it is what they want to hear. When I load it up and type “stock market” two of the top three videos are just about that!
When people see videos hyping the stock market they come to believe the hype is real and then look for more videos full of hype. This type of internet programming is what has convinced a generation of people that Bitcoin is money when it doesn’t function as money at all and is now creating a swarm of daytraders who believe in this rally and are fully convinced that AI will change the world. They have forgotten that two years ago the same identical messaging meme was pushed at them with the invented word “Metaverse.”
Now you have to decide whether you want to chase this rally or just get guaranteed returns of around 5% over the next 12 months. That’s what I’m doing with short-term bonds and then allocating a good portion of my money into precious metals and mining stocks. This is a message that no wants to hear right now in the trading world right now, so I am taking a break and not saying much. I was bullish on the markets from November-January, even at one point saying NVDA was a stock to buy. But now that we are this late into the rally, most of the gains have already been made, so I have no interest in telling people to buy now. The time to buy was months ago, not now. I do not chase and will not tell people to chase to get views and attention. I just take a break and STOP! The last video update I posted myself on Youtube was in February titled “The Bear Market Of 2022 Is Over, But The Stock Market Is Not Going Into Another Bubble Boom.” I have nothing more to say. It could be until next year that the market rolls over for good and I am not going to spend week after week telling people a bunch of hype about the markets to build an audience or keep people interested in what I have to say.
To get my stock trading updates subscribe to my free email newsletter, just click here.
-Mike
