This stock market rally began back in November. In reality, the rally started with a shift of money into Europe, commodities, and mining stocks as the US stock market lagged. But, in January, momentum began to shift into big cap tech stocks. Then March came and bank stocks in the United States crashed and now their charts are all broken. Depositors are still leaving smaller banks and going to higher yielding CD’s they can get from large financial institutions.
The rally faltered when the banking woes hit. The yield curve is now more inverted than it has been since the early 1980’s and the stock market is rallying. I haven’t really been paying attention that much to what is happening in the markets and doing fewer and fewer trades. Valuations are high and I just don’t see any fat pitch buys here. Frankly, I just assume get guaranteed 5%+ returns on my money now than try to gamble in risky stocks and trades in this environment, but the stock market is rallying.
The top gaining stocks are the big cap tech stocks like AAPL, MSFT, and NVDA.
At this point, NVDA shares are rising in an almost parabolic fashion.
When the Nasdaq has outpaced the S&P 500 in the past, as it is doing now, NVDA has usually been one of the leading stocks and big cap momentum plays. There are days now when it is the most traded stock on Fidelity and Robinhood, now surpassing the TSLA trading mania.
I haven’t really been watching the financial media on TV much in the past few weeks either. When I was tuning in back in March and early April almost all of the news segments were talking about regional banks, a possible recession, and the next Federal Reserve move. I tuned in to Bloomberg, though, last Thursday morning and was surprised to see three guests in a row come on and say that none of those worries matter anymore to the stock market, because AI is going to create so much worker productivity that it is going to cause inflation to collapse and you simply had to buy the big cap tech stocks that are getting in on it.
They were talking as if they were all Cathie Wood, but none of them were her. They were all money managers, like her, but they were new people I had never seen before talking up their book, and convincing themselves and the audience that this new meme of AI was going to make them rich by buying more tech stock shares after they have been rallying for almost eight months now.
They even said you had to buy now or you would miss out.
Of course, we heard all this same stuff when it came to the Metaverse too.
Remember how that was going to change the world and you had to buy the stocks involved in it?
Now Facebook aka Metaverse company is rebranding itself in its last earnings call as a center of AI innovation and not mentioning the Metaverse at all as a reason to buy the stock.
To give you a flavor of the current AI talk check out this segment of CNBC.
If you watch this you may notice that they flash up the guys price target of $300 for NVDA on the screen.
It already is above his target so he applies extreme hype to get people excited into chasing its price action at a level beyond his price target.
Two years ago NVDA was talked about as a stock that would benefit from the Metaverse.
All the Wall Street analysts now will do this AI talk until the rally ends – whether that is next week or next year – and everyone on Youtube will talk about this now to get attention, as the algorithms show the videos the masses want to see. I’d bet that RealVision will stop talking about “exponential age” and now AI time – not caring that if the hype of AI is real it means the dehumanization of mankind by placing the machine above man.
Luckily, it isn’t real.
To see how real AI is all you have to look at it is what is happening in San Francisco.
No other city on earth has as many people in it that worship Tesla cars, with more tech bros employed by big cap tech companies willing to spend the money to buy any new tech fad out there to be cool.
Well, in that city AI robot cars are making such a mess that they are blocking up traffic to the danger of public safety.
Watch this AI car in action.
This isn’t a one off event. Just the other week, AI cars caused such a mess that they blocked traffic FOR HOURS in San Francisco.
Would you want to live or drive around in that city?
And yet the tech bros still praise AI?
They need a new meme to make you believe in their “innovations.”
Start ups are going to spring up of companies that can’t make any money in silicon valley, but claim they are riding AI.
Buy into the stock market rally if you must, but treat it like any other rally using a strategy and charts to guide your decisions.
Don’t fall for the hype, because when the market has its next decline all the hype of today will be forgotten.
Remember what happened to those meme stocks of early 2021?
Or Virgin rockets?
Well, Virgin Orbit went bankrupt just eight weeks ago.
Personally, I am putting a good chunk of my money into things that I know are real and won’t go bankrupt, and that means a lot is in gold and silver. Let the tech bros have their fun. I will never in my life get in a robot car, much less buy one. Riding in an old fashioned horse and buggy is safer than these robot cars.
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-Mike
