Yesterday was an ugly session right out of the gate. The first tell-tale sign was the night before, when all the companies that posted results after closing indicated that they would open lower, including Adobe (ADBE). Although I took a hit on the position, I appreciate that the market is not rewarding every company that mentions artificial intelligence (Al).

There have been clear signs of profitability and the ability to gain market share in what has become the ‘Wild West.’

There was nowhere to hide.

Short-term bias is now to the downside for small-caps and midcaps.

Everyone jumped on the bandwagon when the iShares Russell 2000 ETF (IWM) opened that monster gap in early November.

Despite the current slide, the chart remains constructive.

Red Alert

The advance-decline has now been negative nine sessions in a row, the second-longest streak on record. I can’t say it's cathartic or healthy, but we are not panicking.

Today’s Session: Waking up Dinosaurs

Wall Street strategists (not to be confused with this company: Wall Street Strategies) and other assorted mavens have implored investors to dump AI stocks all year and seek opportunities in slow-moving “value” names.

We are cognizant of history, the role of valuation ranges, etc., but this advice from the self-proclaimed “smartest” folks in the room has been an unmitigated disaster.  I tip my hat to those who went outside their comfort zone and groupthink to suggest not selling all your mega cap names.

Their assumption that the AI story has peaked has been weird and wrong. Last night, Broadcom (AVGO) moved the AI story along its natural path.

Wall Street is leaping over itself to join the movement, but its share price targets still seem low.

🔸 KeyBanc: Raised to $260 from $210 - Overweight

🔸 Cantor Fitzgerald: Raised to $250 from $225 - Overweight

🔸 Rosenblatt: Raised to $250 from $240 - Buy

🔸 BofA: Raised to $250 from $215 - Buy

🔸 JPMorgan: Raised to $250 from $210 - Overweight

🔸 Bernstein: Raised to $250 from $195 - Outperform

🔸 Evercore ISI: Raised to $250 from $201 - Outperform

🔸 Truist Securities: Raised to $245 from $205 - Buy

🔸 Mizuho: Raised to $245 from $220 - Buy

🔸 TD Cowen: Raised to $240 from $210 - Buy

🔸 Deutsche Bank: Raised to $240 from $190 - Buy

🔸 Morgan Stanley: Raised to $233 from $180 - Overweight

🔸 UBS: Raised to $220 from $200 - Buy

🔸 Jefferies: Raised to $225 from $205 - Buy

🔸 Baird: Raised to $210 from $195 - Outperform

🔸 Piper Sandler: Raised to $250 from $200 - Overweight

🔸 Barclays: Raised to $205 from $200 - Overweight

🔸 Morningstar: Upgraded to Hold - Price Target $190

🔸 HSBC: Raised to $175 from $160 – Buy

Wall Street reflects Main Street

Rich people have more money than ever.  From Restoration Hardware (RH):

Everyone else lives paycheck to paycheck and needs credit to keep up with the Jones.  From Affirm (AFRM):

Comments

Hard to believe what is happening to Adobe and Advanced Micro. Dave on 12/13/2024 11:00:22 AM

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