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Longtime readers will know that before I joined Chaikin Analytics, I was fortunate enough to work alongside Steve Sjuggerud at Chaikin Analytics' corporate affiliate, Stansberry Research, before his successful retirement.
Steve is a legend in the financial-newsletter industry. His macroeconomic insights easily put him in the top ranks of analysts around the world. And he was a master communicator.
Steve guided his readers back into stocks after the 2008 bust. And he accurately explained that low interest rates would lead to an asset bubble unlike anything the world had previously seen.
At the time, Steve dubbed it the "Bernanke Asset Bubble." That later would evolve into the concept of the "Melt Up."
Put simply, Steve nailed it. And he delivered years of powerful analysis to his readers as a result.
But legends in finance take time to learn and grow. After all, no one in life comes out with all the knowledge and experience they need on day one.
In Steve's case, the dot-com bubble was a particularly sore spot for him. In hindsight, it was so obvious what was going on.
But Steve, being the practical guy that he is, couldn't get on board with what seemed like "irrational exuberance." As you might recall, in 1996, then Federal Reserve Chairman Alan Greenspan coined that term. As Greenspan had said in a speech...
How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions... and how do we factor that assessment into monetary policy?
But Steve wanted no part of it. All he saw was the "irrational" part of the trend.
Explaining it to me, he said things like "it felt like everyone around me was getting rich except for me." And that he was "stuck on the sidelines."
I can't help but think of that today...
It's obvious that we're in the midst of an AI craze.
And Nvidia is its poster-child stock.
Today, the company earns a "very bullish" rating in the Power Gauge. And rightly so. The momentum behind the stock is as serious as it gets.
But that doesn't mean it's fully rational, either. The Power Gauge sees that too...
Today, Nvidia trades at a price-to-sales ratio of roughly 35 times. And it sports a price-to-earnings ratio of more than 40.
That means the stock is expensive by traditional measures. So the "bearish" rating the company holds in the Financials factor category makes a lot of sense.
But there's no avoiding the momentum behind today's market.
So... what are investors supposed to do?
Well, you could do what Steve did during the dot-com boom. You could end up stuck on the sidelines wanting nothing to do with the "irrational" side of this market.
Or you can participate in the "exuberance"... and make an effort to step aside when the market falters.
That said, at this point I think there are better and more interesting ways to play the AI trend than Nvidia. And at Chaikin Analytics, we've covered several of these companies in our paid publications.
But the simplest answer is this...
Today, we're in a bull market. And I intend to participate in it as long as possible.
Of course, that doesn't mean blindly piling into any stock. As I've said many times here at the Chaikin PowerFeed, you still need to beware of the weaker stocks hiding within the strong overall market.
But I don't want to end up stuck on the sidelines just because parts of this market are irrational. When conditions change, I'll use the Power Gauge to help me reevaluate.
Good investing,
Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.04%
11
16
3
S&P 500
+0.38%
163
278
52
Nasdaq
+0.66%
20
69
11
Small Caps
-0.21%
604
988
327
Bonds
+0.11%
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+3.41%
Real Estate
+3.02%
Financial
+2.39%
Materials
+1.81%
Discretionary
+1.49%
Communication
+0.88%
Staples
+0.73%
Industrials
+0.61%
Information Technology
+0.04%
Health Care
-0.49%
Energy
-2.66%
* * * *
Industry Focus
Pharmaceuticals Services
10
28
7
Over the past 6 months, the Pharmaceuticals subsector (XPH) has outperformed the S&P 500 by +3.92%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #15 of 21 subsectors.
Top Stocks
PFE
Pfizer Inc.
AMRX
Amneal Pharmaceutica
HRMY
Harmony Biosciences
* * * *
Top Movers
Gainers
NFLX
+11.09%
LW
+10.17%
ISRG
+10.01%
DXCM
+4.07%
PODD
+3.26%
Losers
BG
-6.33%
CVS
-5.23%
CI
-4.85%
SLB
-4.71%
ADM
-3.8%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
ARE, WRB
NUE
No earnings reporting today.
Earnings Surprises
RF Regions Financial Corporation
Q3
$0.57
Beat by $0.04
AXP American Express Company
Q3
$3.49
Beat by $0.20
FITB Fifth Third Bancorp
Q3
$0.85
Beat by $0.03
PG The Procter & Gamble Company
Q1
$1.93
Beat by $0.03
SLB Schlumberger Limited
Q3
$0.89
Beat by $0.01
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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