Fundstrat
Fundstrat's Mark Newton: Why Tech Still Leads but Small Caps Are Key
9/24/2025, 7:57:22 PM
Economic Summary
- The market is bifurcated: a tech-led rally (notably AAPL and NVDA) has driven headline indices higher while the equal-weight S&P has been flat for two months, implying concentration risk if other sectors don't catch up.
- Seasonal/cycle risk increases from mid-October into early November, so even if near-term weakness is limited, October could see more pronounced declines if breadth doesn't broaden.
- Sentiment is muted with investors worried about tariffs, inflation, and Fed rate-cut paths; this subdued sentiment is contrarian-bullish because it reduces speculative excess.
- Semiconductor stocks show very strong technical momentum but elevated overbought readings (weekly/monthly RSI ~75 for the group), suggesting possible short pullbacks despite ongoing AI-driven demand (relevant to MU, NVDA, INTC).
- If the dollar and yields pull down over the next month, it should be supportive for emerging markets, cryptocurrencies, treasuries, and broader equity markets.
Bullish
- AI mega-trend remains intact, supporting tech and semiconductors.
- Small and mid-cap strength (IWM breakout) could broaden market leadership.
- Sentiment remains subdued, a contrarian positive for bulls.
- Emerging markets, crypto, treasuries, and equities could benefit if dollar and yields fall.
Bearish
- Broad market breadth tired outside tech; equal-weight S&P essentially flat for two months.
- Seasonality and cycles historically turn down mid-October to early November.
- Apple and NVIDIA sitting at all-time highs and stalled, concentrating risk in the S&P.
- Semiconductor group looks overbought (weekly/monthly RSI ~75), risking a near-term pullback.
Bullish tickers
NVDAMUINTCSTXWDCMSFTGOOGLTSLAAAPLIWM
Bearish tickers
AAPLNVDAMUINTC
AAPL
Bullish
Technology leadership can continue to support indices if momentum resumes.
Bearish
At all-time highs and currently stalled; its large S&P weight creates concentration risk.
NVDA
Bullish
Central to the AI mega-trend with strong momentum and ongoing investor interest.
Bearish
At all-time highs and stalled; sizable S&P influence could amplify any pullback.
INTC
Bullish
Part of the semiconductor comeback and benefiting from renewed sector strength.
Bearish
Has lagged recently amid shifting leadership within tech and semiconductors.
MU
Bullish
Strong readthroughs from earnings and AI demand support the sector's outlook.
Bearish
Semiconductor group overbought readings increase pullback risk for individual names like MU.
STX
Bullish
Computer data storage names (e.g., Seagate) have seen a notable comeback.
WDC
Bullish
Western Digital is participating in the data storage rebound described by the speaker.
MSFT
Bullish
Remains part of the broader AI-related leadership cohort.
Bearish
Former leader that has lagged in recent rotation of tech leadership.
GOOGL
Bullish
A former laggard that has reaccelerated and contributed to tech strength.
TSLA
Bullish
Has started to reassert strength after earlier lagging performance.
Bearish
Subject to internal leadership shifts and volatility.
IWM
Bullish
Russell 2000 breakout indicates improving small-cap breadth, a positive breadth signal.
People mentioned
MarkJosh