What's Really Behind The Stock Market Rally

Submitted by QTR's Fringe Finance

Everybody knows it but nobody is giving it any serious consideration: the entire market is being driven by Nvidia, Apple and even GameStop. And when one, if not all three of these names starts to experience some selling, they are likely taking the whole market with it.

I have been making note of the fact that Apple and Nvidia could be the market's black swans for the better part of a year now. And forget about cash on the sidelines eventually drying up as a result of savings running out, the market is also not taking into account multiple looming red flags for these names.

Zero Hedge has been all over the story of "bad" market breadth that no one on Wall Street seems to want to notice or talk about out loud. They wrote on X today:

For Apple, the company remains in the crosshairs of a massive antitrust investigation, the likes of which threw a cold blanket on Microsoft for the better part of a decade in the early 2000s. This is a very real risk that looms under the surface of the company's buybacks, which are likely a large portion of the bid now. The company's most recent 'innovation', the Vision Pro has also all but disappeared from public discourse after receiving tepid reviews.

Also, Apple and Nvidia share something in common: their valuations, at 33x and 77x ttm earnings, respectively, are extremely aggressive. There is a far better case for an air pocket under these valuations than there is over them. So on top of 5.5% rates, bone dry consumer savings, record high credit card debt, unmarked commercial real estate books and continued debilitating inflation, there's valuation risk. 

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And GameStop...well, what better weathervane could their be for the unsophisticated money in the market? As it swings wildly, so swing the last few desperate dollars of retail traders, many of whom are trying for one last "YOLO" in the market with whatever little cash they have left. In the meantime, the company remains a loss-making nightmare with nearly zero fundamental case as its foundation, but for the hoarde of cash it now has and may use to acquire bolt-on acquisitions of companies who aren't one step from death's door. 

And yesterday Zero Hedge noted that an equal weighted S&P - in other words, what the index would do if all components had the same weight and were being driven by Nvidia and Apple, which make up nearly 10% of the index - would be flat since February. 

If these two names were to fall in tandem, it could be the fuse that finally winds up killing this current bull market.

Goldman noted after Thursday's session this week that the NASDAQ finished the day +0.57% despite an astounding 70% of the names in the index trading lower on the session. 

And the Nvidia cycle of driving the market looks ponzi-ish, as was noted when...(READ THIS FULL ARTICLE HERE).