The finished the day flat, largely due to the rotation in the market between mega-cap names and the semis. The market is finally waking up to the idea that what is good for the semis may be bad for the mega-cap names. We already knew that for a handful of software players, but Thursday’s news from Apple (NASDAQ:) about price hikes sent a different message: higher hardware prices are starting to squeeze margins enough that price increases are now inevitable. The question is whether this is a one-off or the start of a new trend.
I don’t know the answer, but at some point, one has to think that one of these big AI capex spenders is going to say, “Enough.” Which company will be first is the question. With second-quarter earnings quickly approaching, you have to look at the companies that report on a fiscal calendar, perhaps those that are starting a new fiscal year, because they could be the first to jump in front of this.
When looking at the software-to-hardware ratio, using the -to- ratio, it is clear who is winning for now.
I noticed that the financial sector () appears to have formed a rising wedge. When connecting that pattern with the broader trend from January through March, it looks like it may be forming a bear pennant. We won’t know if it is truly a bear pennant until we see the XLF either rise above $55 or fall below $52.50. A break below $52.50 would confirm the bear pennant, while a move above $55 would invalidate the pattern.
Finally, for now, Micron’s (NASDAQ:) call wall has held, with the stock pinned around that level for most of the day. No surprise there.
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