Michael Jensen @GenesisGains: "Hello everyone, The market is..."

Denmark

Hello everyone, The market is slightly red today, with the $NSDQ100 around 29,100 and the $SPX500 near 7,385, but beneath the surface the more interesting story may finally be starting to emerge: the first visible cracks in the AI rally. The warning signs actually appeared overnight in South Korea, where some of the biggest AI and semiconductor highflyers suddenly reversed sharply lower after an almost absurd run higher. SK Hynix and Samsung had become poster children of the memory-chip mania, but now even that trade is wobbling a bit. And it is probably not a coincidence that this cooling in AI enthusiasm is happening at the exact same time as optimism around Iran is fading again. Only days ago markets were pricing in some miraculous geopolitical breakthrough. Now the narrative is shifting back toward rising oil prices, fragile ceasefire talk, and renewed fears that Trump could restart military pressure on Iran after the China trip. Markets may have ignored geopolitics for weeks, but energy prices are becoming much harder to ignore. At the same time inflation data is due today, and expectations are not exactly comforting. Rising memory-chip prices, higher transportation costs, and housing adjustments could push inflation toward the highest levels in years. The bond market already seems nervous, with the 30-year Treasury moving back toward 5%. Rate cuts have effectively vanished from expectations again — and suddenly the Fed may be talking tougher, not easier. What makes this market so fascinating — and dangerous — is the growing disconnect underneath the headlines. On one side you have full AI euphoria. Semiconductor stocks now make up nearly a quarter of the S&P 500, the Philadelphia Semiconductor Index has an RSI close to 87, and retail call-option buying has created a self-feeding momentum machine where dealers are forced to buy more stocks as prices rise. On the other side you have a very different reality: banks weak, consumer stocks bleeding, retail names rolling over, credit stress quietly building, and more individual stocks hitting 52-week lows even while the indices print record highs. That is usually not the sign of a healthy broad rally. In fact, six of the last nine all-time highs in the S&P 500 came with negative market breadth — meaning more stocks actually fell than rose. A handful of mega-cap AI names continue dragging the indices upward while large parts of the market already look exhausted. Even some of the biggest momentum names are beginning to wobble. $AMD (Advanced Micro Devices Inc) and $MU (Micron Technology, Inc.) came under pressure as the Korean semiconductor trade weakened, while names tied to the real economy continue to struggle badly. Financials remain surprisingly weak for a market sitting near record highs, and historically that combination rarely ends smoothly. Meanwhile the AI bubble itself is becoming increasingly speculative. Margin debt has exploded, leverage is everywhere, and retail participation is increasingly driven through options rather than traditional long-term investing. Volume remains relatively thin underneath the surface, which suggests this rally is being mechanically pushed higher rather than broadly accumulated by institutions. And then there is the geopolitical side. $OIL continues creeping higher as the Iran optimism fades. Reports suggest Washington is reconsidering tougher measures again, while tensions around Hormuz remain unresolved. Energy costs are already climbing rapidly, trucking prices are surging, and even some supply-chain shortages are beginning to appear in certain industrial products. Ironically, the market still behaves as if none of this matters — at least as long as AI keeps levitating. But history tends to get uncomfortable when markets start resembling two bubbles at the same time: Dot-com style tech euphoria combined with financial-system stress underneath. Michael Burry is once again warning that the market has “jumped the shark.” He has been early before, of course, but the combination of extreme optimism, extreme leverage, narrow leadership, and weakening breadth is becoming harder to dismiss. For now the AI giants still hold the entire structure together. The question is what happens if they stop.

Not investment advice. The author may have financial interests in the mentioned instruments.