How You’ll Know the Magnificent 7 Party Is Over

This indicator signals when to exit Big Tech. Published By Money & Markets, LLC. March 13, 2024 Published By Money & Markets, LLC. March 13, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Michael Carr]( Editor, [Money & Markets Daily]( How You’ll Know the Magnificent 7 Party Is Over Money & Markets Daily, It's SAT season again. And that means students are studying long lists of synonyms and antonyms — just like we did many years ago. I’m sure high school students today still ask: “How will I ever use this in real life?” That’s especially true for antonyms. Odds are high that no one outside of school has ever asked you to pick the opposite from a list of random words. However, that’s a skill you should brush up on because it might just help you spot the end of the Magnificent Seven uptrend… --------------------------------------------------------------- [Turn Your Images On]( [A Tiny $10 Company With a BIG Secret]( Four of the richest men in the world have scrambled to invest in this breakthrough technology before it goes mainstream … and one tiny $10 stock is set to dominate it. [Click for details.]( --------------------------------------------------------------- 1 Indicator Times the Fall of Big Tech The Magnificent Seven are the tech stocks currently driving the market higher. Led by Nvidia (NVDA), the list of stocks, all trading on the Nasdaq exchange, includes Microsoft (MSFT), Meta (META), Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOGL) and Tesla (TSLA). This group now represents more than a quarter of the S&P 500 Index. This means the market is almost certain to struggle when these stocks stumble. That makes them a leading indicator of the market, that is, if we can find a way to track it. This is where antonyms come into play. But before we get to the antonym for the top tech stocks, let’s look at this strategy in action. During the pandemic, stay-at-home stocks soared. Take Zoom Video Communications Inc (Nasdaq: ZM), for example. The company taught us all to say, “You’re on mute,” as the stock soared more than 760% in the first 10 months of 2020. That run-up was clearly a bubble. But we still want to participate in gains like that when they’re available. To see when the ZM party was ending, we could look at its antonym. The opposite of ZM is Boston Properties Inc. (NYSE: BXP) — the largest office REIT as we entered the pandemic. The ratio of ZM to BXP is shown below. This chart captures the relative strength of the two stocks. When the black line is going up, that indicates ZM is stronger. BXP is stronger when the line is falling. ZM Led; Then BXP Took Over [Turn Your Images On] The trendline in blue defines the transition from rising to falling. This simple indicator got you out of ZM just three weeks after it peaked — about 15% below its all-time high. Today, the stock is still about 67% below that 2020 high. Now, as for an antonym for the Magnificent Seven… --------------------------------------------------------------- [Turn Your Images On]( [The Secret of Infinite Momentum]( What if there was a way to only buy stocks that are going up? Adam O’Dell has found a way. After investing $5 million, his AI-driven Infinite Momentum system has proven across 24 years of data that it has the power to beat the market by 300-to-1. Now we want you to access it. [Click here for full details…]( --------------------------------------------------------------- Find the Opposite of Big Tech Stocks These are all tech stocks with rapid growth. Their opposite could be value stocks. To build a list of seven of the best value stocks, I turned to Warren Buffett. The largest non-tech holdings in his portfolio are as follows (Note: All of these trade on the NYSE — not the tech-heavy Nasdaq.): - American Express Company (AXP). - Bank of America Corporation (BAC). - Chevron Corporation (CVX). - The Kraft Heinz Company (KHC). - The Coca-Cola Company (KO). - Moody's Corporation (MCO). - Occidental Petroleum Corporation (OXY). The ratio of the Magnificent Seven and the Anti-Magnificent Seven is shown below: Mag 7's Relative Strength Is Losing Steam [Turn Your Images On] The relative strength of tech's biggest names has slowed in the past few months. You can see that by comparing the steep angle of the blue line in both charts. This is driven largely by Tesla’s recent underperformance. That’s the first sign of a potential breakdown in the market leaders. We don’t need to guess where the second sign of weakness will develop. We just need to watch this indicator. When the trendline breaks, we’ll need to be ready to exit Big Tech. Until next time, [Michael Carr]( Editor, [Money & Markets Daily]( --------------------------------------------------------------- [Turn Your Images On] The Problem With Inflation Overall, the consumer price index (CPI) rose 3.2% in February. Core prices, which exclude food and energy, rose 3.8%. These numbers receive a lot of attention from analysts. But consumers also notice other things like supercore CPI, which rose 4.3%. This measure excludes food, energy and housing costs. It accounts for 24.7% of spending and includes medical care, transportation and insurance among other "must pay" bills. Consumers already knew, for example, that car insurance is up 20.6% over the past year. Homeowners insurance is up even more for many. Supercore CPI in the [Bloomberg chart]( below explains the low consumer sentiment readings, and it could be the factor that disrupts the upcoming election. — Mike Carr, Chief Market Technician, Money & Markets [Turn Your Images On] [(Click here to view larger image.)]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [MY 5-SECOND SOLUTION TO BEAT THE MARKET 3-TO-1]( - [WE CAN BEAT THIS BULLISH MOMENTUM ETF]( - [INVEST IN THE FINAL FRONTIER? 1 SPACE STOCK TO WATCH, 1 TO AVOID]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. 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Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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