Suddenly, everything is on fire, which means lots of people will get burned. The problem with being too myopic about an over-exuberant market is thinking that waiting it out completely on the sidelines is the answer. Let’s take it for what it's worth and try not to get burned.

Even the Beatles Broke Up

The ‘Mag Seven’ is looking a little raggedy these days, as some are saying the real story is the ‘Mag Two’ (NVDA and META). But over the weekend, the S&P 500 announced the addition of Super Micro Computer, Inc (SMCI), which means, at the very least, the ‘Mag Three.’

Meanwhile, the S&P 500 chart is a thing of beauty.

There was some rotation, but it’s still about those Technology (XLK) stocks.

It's rare when the biggest winners are up so much more than the biggest decliners, but that was the case on Friday. Since so much of active investing is assessing risk and reward, the most significant risk with this market is sitting it out.

Breadth & Breakouts

Friday was overwhelmingly positive in every way imaginable, especially the NASDAQ Composite.

Earnings grew by 8.0% versus the consensus of 1.2%, and now the Street says what the Fed does is irrelevant.  

Portfolio Approach

We closed two positions in the Hotline model portfolio this morning.

Today’s Session

The questions will it every stop?

The answer is yes.

The point, however is waiting fora  top then a pullback is folly.

The Perpetual Motion Machine

I’ve read where a flywheel could spin forever with just one push under the right kind of circumstances.

Create a volume of space that is pure (no matter, no gravity, no light, no energy of any kind).

Place a perfectly balanced flywheel made of material that has no internal energy (not even in its atoms).

Balanced down to the placement of individual atoms.

It is on a frictionless axle.

The energy from the initial push would be captured and stored forever in the motion of the wheel.

Or could we get the stock market moving on scuttlebutt of a ton of rate cuts by the Fed, and then keep it going on an assortment of things like the AI revolution and the economy rebounding?

But can this move last forever?

Ryan Detrick points out that the four-month rally ranks with some of the best in history and they all have in common- a year later the market was significantly higher (average of 18.4%).

The dilemma right now is how to get in the game after missing so much opportunity.

A ton of cash flowing into small caps and an almost equal amount into large caps (the new barbel?).

Well, this morning the market will stumble out of the gate and make for the perfect test of investor appetite.

Instead of flying in the ointment, the stock market must deal with occasional ointment in the fly(wheel).

 

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