The rally in April, May, and June 2025 was much despis’d, just like this one
highlights
Smells like Liberation Day
Current Views
Flat
Something to think about
Interesting stat from Twitter (via Chuck). There has been significant insider buying of XLK members of late, with beaten down software names the primary inflow. It does seem like the bearish hysteria around software is reaching a point similar to the bullish insanity around AI Capex plays like Stargate, ORCL, MSFT, and such in 2025.
After two wild, rejected spikes on news, MSFT has dumped from 550 to 350 in just six months. It, like many other tech stocks, peaked on the day Andrew Ross Sorkin released his book: 1929, which highlights the parallels between then and now.
The book explains how a fascination with a new technology wildly inflated valuations and how the democratization of investing allowed wider retail participation than ever before. He explains how megarich celebrity businessmen boosted the stock market’s visibility and how tariffs and weak financial oversight set the stage for a historic crash that unwound all the excess of the post-pandemic stock surge in the 20’s. Maybe the book filtered through into the mind of the market? Who knows.
Anyway, now we are on the flipside of the October 2025 coin. Despite earnings revisions that continue to trend higher, the market has been getting ahead of a potential SaaSpocalypse for months now and continues to go hard on the pair trade (short software, long memory). The SNDK vs. IGV chart is one of the crazier ones I have seen.
Next is the MSFT chart. Note perfect symmetry (up $170 in 5 months then down $170 in 5 months) and the critical $350 pivot. That level was the all-time high before the Fed tightened the screws on tech in 2022, it was a spike high false break rejection in mid-2023, and it was support that held the line in Q1 2025. $356.87 the low so far on this drop.
People are quick to point out that earnings for legacy media didn’t turn lower until years after the stocks had already peaked and therefore even forward earnings expectations can be a red herring. Sure. But the market is also wrong a lot. Going from the max bullish extreme on MSFT to max bearish extreme right into insider buying is at least interesting, and probably bullish. It’s also a pretty easy trade to lever up and risk manage because if we get a daily close below $350, you can bail.
The war is still a huge risk, obviously, but this all feels so much like the script from China Trade War 1 and Liberation Day (escalate like crazy, then bail ASAP). A simple pattern recognition and sentiment / positioning approach would be bullish stocks now, even if it makes no sense macro-wise.
If you look away from the terrible things going on in the Middle East, the AI trade is quietly roaring with SNDK and friends at new ATH (goodbye, short SNDK idea) and even CRWV announcing deals and up 50% in the past two weeks. Markets get bored of geopolitics very quickly.
Calendar
A sparse calendar next week. Perhaps one of the lamest (most lame?) calendars I can remember.
There does not seem to be an official time designating the start of the ceasefire, but if we add two weeks to the rough start time that is April 21/22. Talks between the U.S. and Iran begin Saturday morning, April 11 in Islamabad.
Given the Strait is still under Iranian control, these talks will either have to yield a compromise or a complete U.S. capitulation. Either is possible, but I suppose the third option is that the 2-week ceasefire is just a pause to allow the U.S. to reset and figure out a new strategy. I am in scenarios/planning mode here, not forecasting mode.
Final Thoughts
- A piece from Neha Narula on BTC quantum risk. She is Director of the Digital Currency Initiative at MIT. HT CR.
- Four charts I find interesting.
Have a silly and slightly absurd weekend.
