Laggards to Leaders
Corona Del Mar, CA
Howdy Friend!
AI stocks have been on fire since the October 2023 bottom. Remember how pundits were complaining that only a handful of stocks were responsible for the growth in the NASDAQ 100 and S&P 500? And how this was supposedly an “ominous sign” of things to come?
They were wrong.
Now they're complaining that those same stocks are falling while the broad market broadens.
I think they just like to complain and stir up controversy. Don't listen to them.
Of course laggards will turn into leaders, and leaders into laggards. What's new?
Take for example Super Micro (SMCI). It was a leader until it wasn't. Thankfully the Strategy of the Month I created has traded it very well, but I'm sure the usual suspects are saying it “broke support” and other such pseudoscience.
These same talking heads were giving up on the rest of the market, and suddenly — from seemingly nowhere — the Russell 2000 goes straight up!
Like I wrote about in yesterday's newsletter, markets are manic like a crazy person.
The solution of course is to trade a wide variety of strategies with the understanding that trends in markets don't last. They will often mean revert.
It's like throwing one of those bouncy balls at the floor. Down down down, then hits the floor and goes right back up almost instantaneously. Most people aren't crazy, so perhaps that's why price behavior is so counter-intuitive.
Trade smart,
Dan “Prince of Proof” Murphy
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