It's Nvidia's (NVDA) world; we're just living in it. Performance Thursday was nothing short of amazing. Names such as Advanced Micro Devices (AMD) and Super Micro Computer (SMCI) were huge beneficiaries of the Nvidia report. SMCI has doubled this month, while AMD added 40% in May.
Looking at these charts is dead for a week or two as we need to wait for patterns to emerge or the potential for a gap fill lower. The latter isn't likely unless these names reverse hard after Memorial Day.
Despite some fantastic performances in tech this week, and this year, don't let the performance of the indexes fool you. Only a few names still carry the S&P 500 and the Nasdaq.
Gold looks terrible. Small-caps broke down yesterday. Treasuries can't find a bid. Retail, energy and a long list of sectors simply look broken.
Sure, discretionary names and home builders have found a way to rally even though most economic activity and the trend of interest rates plus inflation suggest they should be doing otherwise. At some point, you have to believe rising mortgage rates will impact housing demand, but the overall housing supply simply doesn't match demand. It's basic supply and demand. As long as demand continues to outweigh supply, we won't see prices come down until demand subsides.
As we head into a long holiday weekend that officially kicks off summer, no one will want to play the hero. Buyers will continue to follow the small cluster of outperformers and tech names.
On the flip side of the impressive moves in some huge tech names are some implosions of big names we don't hear the media discussing. Starbucks (SBUX) kicked off the month at $115. Heading into the long weekend, the stock has fallen below $100. If support fails in the $95 to $97 range, Starbucks risks a quick trip to $90 with a downside of $85 in play.
This isn't a small name, either, with a market cap of $115 billion. It's also a good reflection of higher-end discretionary spending.
It isn't just high end, though, as Walmart (WMT) and Target (TGT) are both struggling. Target sat at $180 in February and now trades at $140. Walmart has been performing well, but even shares of the biggest box retail name have lost momentum. Maybe the disappointing results yesterday from Dollar Tree (DLTR) that knocked 12% off its price shouldn't have come as a surprise.
The market has been clear lately. Stick with the winners. Stick with the winners and stay nimble or cautious on anything outside the hot names.
