Driven by a sustained momentum in AI, capitalization-weighted market indices continue to advance, with the tech-heavy Nasdaq-100 not experiencing a decline of -2.5% or more for 302 days.
This duration marks the third-longest period without such a drop since 1990, analysts at BTIG highlighted in a Sunday note.
Although not necessarily a bearish indicator, this trend suggests a level of short-term complacency in the market, they noted.
That said, it appears there is more broadening “under the surface and there are plenty of opportunities outside of the super high-momentum names that are far from timely, in our view,” the analysts wrote.
Chip stocks continue to hit new records, with the S&P 500 semiconductor index matching its highest two-year gain.
“S&P 500 semi index now tied for the best two-year performance (+131%) on record with ’98 -’99. Weekly RSI is ~84, one of the highest on record. This doesn’t always mean a top, but it has often led to corrections,” analysts at BTIG said.
Meanwhile, the equal-weight RSP and the mid-cap MDY indexes are approaching their historical peaks, while the reflation trade, excluding energy, is also showing signs of a breakout with its index on the rise.
Moreover, last week saw crude oil and gasoline prices surge, while gold achieved a record weekly close after four years of steady levels.
In addition, the biotech sector also showed strength, potentially indicating a significant breakout.
“Last week was an important one for biotech, with an upside gap through resistance. This should now be considered a viable breakaway gap, with upside room towards the 120-130 level,” the analysts commented.