The Nasdaq is on a run for the ages as the market quickly shifted from fear of an oil shortage to enthusiasm about peace. It’s an 11-day day rally in the tech index that has seen some huge gains and a 15% rally in the index from the March 30 low.
The bad news is that we’re now meaningfully overbought on short-term indicators and running into the Jan and Oct highs (record) near 24,000. I expect those to give way but some consolidation first is likely. That said, a break out would really catch the market off guard and lead to some serious FOMO buying.
In terms of the war, it’s worth a reminder that it’s not over and we haven’t reached a peace yet. Negotiations are always hardest at the end and we could get some kind of strikes, or at least a war of words and brinksmanship at any point. It’s safe to say that peace is 95% priced in now so all those risks are to the downside.
There are signs that short covering is fuelling the latest leg of the rally. Tesla is a leader today, up 7.5% and the heavily-shorted software names are rallying, with the IGV software ETF up 3.4%. With that, Intuit is up 5.5% and Adobe is up 3.9% despite a report saying Anthropic could release an AI design tool as soon as next week.
Another name making a big move today is Microsoft, which is up 4% and is back to pre-war levels. However the stock is still in a big home compared to where it was in October.
I think it’s still worth keeping an eye on Iran war headlines but what’s less discussed is the news that came out during the war. The main one was Claude Mythos and that looks to be another step change in AI model power. It’s not out yet but the reports about its hacking capabilities and usefulness among those who have used it are compelling
