Look Beneath the Surface

S&P 500 and Nasdaq up yesterday...but

But what truly drove these two index’s higher?

Three Stocks. #NVDA, #MSFT, and GOOGL made up 100% of the S&P 500 returns yesterday. THREE! Not 500. Three. Of eleven sectors, eight where down yesterday. The Russell 2000 was down -0.7% yesterday. The ETF XLK, a technology ETF was up 3.8% while the XLE ETF which is an energy ETF was down -1.8%. Is this representative of a broad market rally? I think not.

XLE Chart

XLK Chart

Unfortunately I think a lot of people will load up on S&P 500 and the Nasdaq along with Nvidia, Microsoft and Google because the AI headlines over the next week or so. What they are unaware of is that the Yield Curve is at -.71% this morning in comparison to when Silicon Valley Bank folded at -1.07% in March. This low of a Y.C. signals recession not economic expansion as does the -22% in the Commodities asset class since its peak in June of 2022.

CRB Index

Conclusion

I think you get my point. As Grandmother once told me when it came to a girl I was dating in college…don’t be an idiot.