Most of the market is doing great this week, in fact, over 70% of names have positive breadth.
But,
It only takes a few names like Broadcom, Qualcomm, NVIDIA and others in the AI space to go down by a few percentage points.
And then you have the entire S&P 500 going into a pullback and closing in on a correction.
That’s a little taste of what could happen here in the next few months, the concentration risk has turned from an outperformance machine into a massive bullwhip effect for the rest of the market
There are rumors that the SpaceX IPO will take out $5 trillion out of the market liquidity just to fund it at the open, and we’re only $2 trillion of the way there.
Whether that number is accurate or not is not the point.
The point is, that money has to come from somewhere.
In my view, it will come from the most overvalued and overextended AI names in the market.
In fact, it may create one of the best stock-picking environments we’ve seen since 2022.
While everyone is watching the same handful of AI names, I’ve already began screening for the next group of quality compounders trading at depressed valuations.
We broke down the Domino’s Deep Dive for you already, and it’s already crushing the market by 5%.
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