The S&P 500 (SPX) posted another record close as six sectors finished in the plus column, but only 34% of components finished higher. Ford (F) (one of our laggards), topped the list of advancers in a story about its “underappreciated” power-generation business. The artificial intelligence (AI) story continues to be the prime driver of gains.

Red Flags?

It was pointed out yesterday that it was the fourth straight session in which 5% of the S&P 500 finished at new 52-week lows, but this time the number leaped to 9.0% - both stats haven’t been seen before. I know this is the kind of stuff that sets off alarms. I closed some positions too quickly, partly because of this kind of thinking, when we should be more concerned about the weakness in Financial (XLF) stocks rather than the strength in AI-related names.

Factors

Most of the market was in the red, though buying broadened across large-caps.

When I started in the business, I was told to only trade semiconductor (SOXX) stocks because they were de facto commodities. For what it's worth, commodities are on fire, too. Meanwhile, the last time semiconductors flashed overbought signals (the relative strength index (RSI) was above 70), the pause was a day or two long before the march higher resumed.

The smartest folks in the room (hedge funds) started selling chip names at the start of the Iran Conflict and are now short. They will stoke a media campaign to derail this move, but there isn’t much time left before they have to cover. Wouldn’t it be a delicious irony to take massive profits as the smart folks panic-buy?

American Exceptionalism

I can fret about Lululemon (LULU) and Nike (NKE) hitting new lows, or I can cheer the latest example of ‘American Exceptionalism.’ I chose the latter. By the way, it's not 2000 (see table).

IPO Summer Kicks Off

A week ago, Cerebras set its initial public offering (IPO) at $115 to $125 per share; instead, the offering was priced at $185 per share, raising $5.5 billion, and making it one of the richest tech IPOs in years.  The company was going to go public last year, but was ridiculed for having only one major customer, the United Arab Emirates (UAE).

Now, it's doing business with OpenAI and others.

The company also turned down a last-minute offer from Arm Holdings (ARM), backed by SoftBank.  Buckle up, boys and girls, the summer has officially begun.

Today’s Session

The stock of the morning is Cisco (CSCO), which has finally escaped its legacy of leading the dot.com boom and bust and is becoming a player in today’s AI boom.  The business says it all for the state of Technology (XLK):

• Hardware +30%
• Software +1%
• AI Orderbook $9.0 billion from $5.0 billion

Irrational Exuberance

Retail investors are stepping up more, but their attitude towards the rally is less than the media narrative. Bearish sentiment increased and remains above the historic average.

Consumers Hanging Tough

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