TMTB EOD Wrap

Good afternoon. QQQs fell 1.8% while IWM outperformed only dn 1% / ARKK dn 3.5%. Even BTC was red, down 6%. Yields were down 5-7 bps across the curve (the lack of upside follow through the last couple of weeks on hotter eco data was a tell this wanted to break lower). In credit, investment grade and high yield spreads are wider for the first day in the last four.

The QQQs fell below our “line of demarcation” around $439/$440, which puts us on alert in terms of short-term positioning, especially since sentiment seemed to have reached a crescendo the last couple of days; it seems like the pattern of weakness during MS TMT which we called out this weekend continues this year as well. However, we’re still above the 20d and saw strength in names like NVDA/AMD today and CRWD print should help sw space tomorrow so nothing too worrisome yet; still, we’d like to reclaim that “line of demarcation” before pressing the gas again short-term.

Software was the big loser today as GTLB miss further catalyzed the move to hw AI laggards we’ve been talking about (HPE another +5% today). Value was the big factor outperformer on the day.

Not any one particular reason for the sell-off today, but a few I saw mentioned: AAPL still a big component of QQQs and has been in free fall; we were just extended; the crypto reversal; weaker ISM services print; and idio news like GTLB driving the sw space down (this might reverse somewhat follow CRWD this afternoon) driving a rotation into laggards.

In internet, EBAY +2.4% as value factor helped and investors getting comfortable with cheap valuation and burgeoning bull case (see our weekly more details). It was also helped by news the House unveiled a bill that would force ByteDance to divest Tiktok or face ban. The Hill: