The Mag 7 Warning Sign

Añadido: 2026-05-27

[00:00:02]Hi everyone, Gianni DiPoce here with you for TheoTrade and today is Tuesday, May 26th, 2026.

[00:00:08]We're back from the holiday weekend.

[00:00:10]Markets were closed yesterday in observance of Memorial Day and definitely want to take a moment to thank all of those that gave the greatest sacrifice to give us the opportunity and privilege to trade in in the comfort of our home. So, thank you to all of those, but over the weekend we did have some positive geopolitical developments that led to stocks gapping higher to say the least and we hit new all-time highs across the board in the S&P. Nasdaq's outperforming to the upside and the Dow. The Dow has actually faded quite a bit on the day and now actually in negative territory.

[00:00:45]You also have the Russell 2000 surging on the day. So, what you're seeing so far in today's session to start off this shortened trading week is a rotation back into the growth and risk-friendly areas of the market because last week you actually had utilities as the top performing sector in the market. Now, traditionally, seeing utilities outperform is a warning sign. It's a sign that money within the equity market is seeking safer sectors, right? Utilities higher dividend paying companies. Stocks don't rip, you know, 100% plus over the course of a few months like tech stocks can.

[00:01:26]So, we saw that outperform, but tech still did well last week, but this is really a market's response to the positive geopolitical developments and the potential for a deal between the US and Iran over the geopolitical conflict.

[00:01:39]So, needless to say, to start off this week technology is dominating every other sector. Semiconductors, the Philadelphia Semiconductor Index up almost 5% on the day to another new all-time high. But, you're not really seeing that much strength at the mega cap tech level. Now, the good news is that you're still seeing it outperform, but I would have expected a bit more from the magnificent 10 here today. Mag 7 largely has actually just turned negative on the day. We do also need to pay attention to how the S&P has faded notably off its high of the day as well. So, that is something to pay attention to. Still need to watch the close. You know, as long as we don't close near the lows of the day, I'm not really going to make that much of a fuss about it, but the fact again that we hit new all-time highs across the board is a very good sign. Again, with the Nasdaq outperforming to the upside, chips outperforming, this is a really good sign. Still keen on a rotation within the tech space into some of the downtrodden sectors of tech including software and even computer hardware.

[00:02:47]I'm still long Dell right now. I am looking for Dell to hopefully hit 310 so I can finally book the rest of my profits on this trade.

[00:02:56]I actually bought Dell back in mid-March before the market had actually bottomed and just goes to show I was actually early March, but it just goes to show how the strongest stocks even in a turbulent market environment will find a way to rally. So, this exit at 310, I already have my order set, would be tremendous especially going into earnings in a couple of days. You know, earnings are a wild card as always this earnings season. You know, I had some stocks moving my favor, had some stocks gap down against me, but it's all part of the process. Wash, rinse, and repeat.

[00:03:31]So, the fact that you're still seeing names like this show strength. AMD, you know, up another 6 and 1/2% on the day.

[00:03:38]Apple, new all-time high there giving some of it back, but I'm also looking for a rotation into some of the downtrodden Mag 10 names. You know, you look at Tesla, which I have you know, various forms of positions open on Tesla right now.

[00:03:53]Palantir, Palantir showing trying to show signs of life and bounce off of those lows. Microsoft and Meta, you know, Microsoft down on the day, but I think there's some opportunities here, especially with IGV, this software sector ETF, trying to come out of this low. And Meta, too, I'm not sleeping on that, either, because when you have stocks like AMD up over 100% on the year, when you have stocks like Meta and Google absolutely dominating this market, the natural course of sustainability for any bull market is rotation. And remember, these mega-cap stocks, these 10 stocks, make up 40% of the S&P. So, you do need to see rotation within that category, as well.

[00:04:35]Otherwise, you're going to have some other issues. So, obviously, the other big moving market on the day, crude oil, you did gap down after the the announcements over the weekend, you bounced off the low, you actually fell below 90, you're about up a little bit more than four bucks from that low, but if you form a lower high here, I still would like to see this drop back down to around 80, and then I think that's going to be the big entry point for for oil.

[00:04:58]Could be in a couple of weeks here.

[00:05:00]Bonds loving the news of oil being down.

[00:05:03]We did just roll to the September contract. Now, I do think that bonds are going to rally over the next couple of months. I don't think it's going to last long-term, but I'm not surprised to see it backing off the highs of the day here, basically just retesting former support turned resistance. A little bit of backfilling here would be completely normal and healthy, but I am eventually looking for this to, you know, probably rally back up to the 114, 115 zone in the next few months. The dollar, interestingly, up even with crude oil down and bonds up, that's kind of a flip from what we've seen recently, but I think it's because US markets were closed yesterday. We'll see if that correlation reverts back to how it's been acting recently uh into the remainder of the week. Uh and then of course you have precious metals which continue to be dead money. I just don't see a lot of uh good things happening uh in metals right now near term. I don't think they're bullish or bearish. I think they're neutral. And so I'd love to see metals continue to chop around, go sideways into the next few months, and then eventually have that next base for for more upside. I mean you even look here at silver, barely up on the day, not really doing much. I just don't think there's a lot of exciting things happening in in metals. And that's normal. After the run that we saw where silver went up 4x last year in a matter of 8 months, uh you don't want to see a continued rally because then it's going to crash and do nothing for 10 years type of thing. So you want to see it build a base. I think there's still some opportunity in time. But when you look at crypto, you know, crypto uh still having some issues. Bitcoin was up earlier in the day giving back all of those gains. It's really remarkable uh how stocks have continued to do well because I've always viewed crypto as kind of a barometer for risk, but it still is a small asset class, not very significant in the grand scheme of things. Like crypto's not going to cause a financial crisis type thing. Uh unless, you know, there's some funky uh deal stuff, loan stuff going on in the background. Uh but what's also remarkable is how much better a lot of these traditionally known crypto stocks have been doing. I mean you look at APLD, you look at HUT. They've been doing very well, uh still hitting new all-time highs and whatnot. And because that because we like to respect the principle of relative strength, buy what's the strongest, avoid avoid what's the weakest, I was always attracted to crypto stocks because they always went up more than cryptocurrencies themselves. Was never looking to be part of the, you know, the cool crypto call club. I just wanted to, you know, own the assets and own stocks that went up.

[00:07:39]And uh crypto miners always did that more so than crypto itself. So, that's what I'm looking at right now. Lots of opportunity in this market. Uh, I think we can probably rally into mid-June to mid-July. Then things get interesting.

[00:07:52]I'd I'd actually like to see a little bit more volatility before the midterms, but I think right now you got to respect the trend and the trend is up. So, that's going to do it for today, my friends. Thank you so much for tuning in and I hope to see you in the trade desk chat. Take care, everyone.