The market is experiencing a trend shift, with some sectors like the Russell 2000 outperforming while others, like tech, potentially face a downturn. This dispersion is partly driven by a well-supplied S&P 500, leading to increased volatility in other sectors and potentially causing Nvidia to top out. The speaker also highlights the speculative nature of the market, with several stocks driven by low floats and high momentum.
Market Trend Shift
• 00:00:02 The market is undergoing a major shift, with certain segments like the Russell 2000 (IWm) experiencing significant gains while others, particularly in the tech sector, are lagging. This shift is related to the increased supply in the S&P 500, forcing investment dispersion and creating opportunities for certain segments to rise.
Nvidia's Potential Topping
• 00:04:12 Based on market dynamics and supply/demand considerations, there's a possibility that Nvidia may be reaching its peak. This is not a high-probability prediction but is related to the broader market dispersion and the possibility that other sectors need to see a downturn. The speaker emphasizes that this assessment isn't based on traditional technical or fundamental analysis.
High Beta Stock Performance
• 00:05:15 High beta stocks, especially those with low floats, have been outperforming since mid-November, exhibiting significant momentum. Examples include Upstart, Shopify, and others. It's likely retail investors are not solely responsible for the gains; the speaker suggests it's also driven by speculation and potential squeezes.
IWm's Performance and Speculation
• 00:05:55 IWm, a Russell 2000 ETF, has been experiencing tremendous growth and has hit a new all-time high, fueled by high momentum and speculative buying of high-beta stocks it holds. The speaker emphasizes the risk of significant downward movement following such a speculative push, as these surges can be followed by significant corrections.
Square and Bitcoin Correlation
• 00:12:17 Square's stock price has become strongly correlated with Bitcoin once again, after a period of divergence. This correlation is due to Square's holdings and its regular Bitcoin purchases. The speaker suggests that if Bitcoin experiences a significant downturn, Square's stock is likely to follow suit.