TMTB EOD Wrap

Good afternoon. QQQs -12bps but one of those days where the story underneath the surface tells a lot more interesting story. High beta momentum down 8% with SPX/NDX down less than 50bps. Semis -3% vs. Software +3% and the gap widened through the day. The former weighted down by ARM/COHR misses and the latter helped by DDOG/FTNT’s better prints, giving software bulls hope that there is alpha to be had in the space and that a good print will be rewarded with a good move. However, DDOG and FTNT different than let’s say most names of app sw. One could make a strong argument that DDOG & FTNT (or cyber in general) is helped by AI demand, while the case is hard to make for something like WDAY or NOW or FIG. It’s still unclear how that latter group would respond to strong numbers. Some unwindy action in internet too with META outperforming favorite longs GOOGL/AMZN on the Megacap side while shorted names like RBLX +2% and DUOL +8% although DASH +2% sold off throughout the day and CART -5% followed through on yesterday’s miss so price action outside of AMZN/GOOGL continues to feel anemic here.

Positioning has been stretched following the big semis move beginning at the start of April so it’s not wholly surprising to us to see a day like today when catalyzed by some earnings results. The obvious — and hard question — that most were asking today is if this is the start of a bigger turn for semis or just the expected pullback/a bit of unwind after a huge ramp.