Peak is one of the most brutal terms in the stock lexicon. Peak means you are too late. Peak means it is over. Peak says sell now or forever hold your peace because you can only go down from here.
I don't like to traffic in peak. I don't like to even get near it and I try to think that, for example, when I select stocks for my charitable trust, Action Alerts PLUS, where I can make no money and give away all capital gains and income, I try to steer clear of anything that can peak, meaning that the growth is slowing and you are going downhill, no different from when you summit and then head lower the rest of the way.
Right now, this month, we have seen so many peaks that frankly it is a bit scary. I am going to reel down some so you know what I am talking about empirically as these are all from the top decliners for the month in the S&P 500 and the Nasdaq 100.
First peak: China. When you see the rollover in Pinduoduo (PDD) , an online second rate Amazon (AMZN) , an online second rate Expedia (EXPE) and Baidu (BIDU) , an online second rate Google (Alphabet: (GOOGL) ), you know that we are done with China as an investment thesis. The decision by President Xi to crush American shareholders of Didi (DIDI) because either Didi's management or its largest shareholders got too big for its britches, was a tactical blunder. The West had been a fantastic place to rip off unsuspecting investors and make Chinese citizens and members of the Communist Party rich that I think Xi will regret it. But he's the all powerful czar of China and had had enough. The result? China's an outlaw and its stocks are now cons. If you own one institutionally and it goes down you should be fired.
The brokers will not give up. There is too much easy money to be made and they have no geopolitical scruples. They will make the next few pop. But only fools should trust the regime with their money ever again.
Second peak? Semis. Holy cow, that Taiwan Semi (TSM) call made it clear that the shortages and tight supplies are over. That's why an AMD (AMD) and Xilinx (XLNX) -- which are merging -- or Micron (MU) and Microchip (MCHP) -- or an Applied Materials (AMAT) and KLA (KLAC) , and even Nvidia (NVDA) have dropped off the face of the earth. I disagree with this judgment but I am talking my Action Alerts PLUS book because we own AMD and Nvidia. I just think this is a pause in growth and that Taiwan Semi has it wrong. There is tremendous demand for these chips but Wall Street got too bulled up. I think that you pick one and buy some right here. I prefer AMD because I think Intel (INTC) screwed up royally trying to buy TSM rival Global Foundries and I wonder if Taiwan Semi cancels their orders for them. Splashy but ill-advised, a lot like the new Pat Gelsinger, not the old one from VMware (VMW) . I miss the old one.
Then there's a huge number of oils, so many that I can only mention a few: Marathon (MRO) , Occidental (OXY) , Diamondback (FANG) , and oil services giant Halliburton (HAL) . These declines signal the end of the rally of oil itself, something that this weekend's OPEC Plus agreement sure signals to be the case. I don't think there will be a big decline. I do believe we are at equilibrium because of the strength of the world's economy but I think OPEC has found the level and doesn't want it to go higher less we start pumping furiously in the Permian, hence the decline of some of the most Permian intense oils.
Then there's leisure and entertainment, a combination of the cruise ships and the casinos and even Disney (DIS) . I think this one is all about the variant and a short-term peak in entertainment. We are scared of COVID-19's Delta force. We know we are lucky that it is only making people increasingly sick but not killing them. The worry is the breakthrough which is increasingly likely given that whole parts of this country have decided that the vaccine represents some sort of alien force that's worse than the disease it prevents. Well, they won't have long to wait. You either get vaccinated or you get COVID. The choice is yours.