TheStreet

Stocks' record-setting rally may be on fumes

Charley Blaine
5 min read

In This Article:

To state the obvious, stocks are on a roll

The S&P 500, the Nasdaq Composite and the Nasdaq 100 indexes all hit record highs on Tuesday before the Juneteenth holiday.

Chip giant Nvidia  (NVDA)  not only hit a new high. It surged past both Apple  (AAPL)  and Microsoft  (MSFT)  to claim the title as the world's most valuable company.

Nvidia ended Tuesday at $135.58, up 3.51%, with a market capitalization of $3.335 trillion.

Microsoft's market cap was only $3.317 trillion, with Apple at $3.286 trillion.

Related: Analyst revamps Nvidia stock price target as it becomes world's most valuable company

So, the current setup is like this:

  • Nvidia is now up 174% in 2024, after jumping 239% in 2023. It's the first time in perhaps 20 years that a company other than Microsoft or Apple has been the most valuable U.S. company.

  • The Nasdaq 100 Index, which includes Nvidia, Microsoft and Apple, is up 18.3% after a 53.8% jump last year. Microsoft and Apple are up 18.7% and 11.3% for 2024, respectively.

  • VanEck Vectors Semiconductor ETF  (SMH)  is up 58.3%. (Nvidia is the ETFs biggest component, representing 23% of assets.)

  • The Nasdaq Composite is up 19% after soaring 38.9% in 2023.

  • The S&P 500, at 5,487, has gained 15% after rising 22.4% last year.

The next questions are these:

  • How high can the market go?

  • How can people tell?

  • Are stocks about to stall out?

You can gather a dozen people around a table and get a dozen answers.

The most extreme may be Julian Emanuel, chief strategist at Evercore ISI, who bumped his year-end target for the S&P 500 to 6,000 from 4,700. The reason: Inflation is moderating. And artificial intelligence can't be stopped.

Goldman Sachs is pitching the idea of 5,500, which in its view means the market is near topping out.

Related: Analysts revisit S&P 500 price targets after record run

A few actually see stocks pulling back, that is, stalling. But their view is a minority on Wall Street, which really prefers markets to move higher.

On Thursday, at least, bulls are in the ascendancy. Futures trading late Wednesday suggests stocks will open higher.

The issue that has been live for the past week is still there: Using relative strength index as a momentum measure, the S&P 500, the Nasdaq and the Nasdaq 100 Index are all overbought.

Traders work on the floor of the New York Stock Exchange in April.<p>Michael M&period; Santiago&sol;Getty Images</p>
Traders work on the floor of the New York Stock Exchange in April.

Michael M. Santiago/Getty Images

Seeing a stall in the charts

Having an idea that a stall may be at hand means watching the charts.

Related: Veteran fund manager sounds alarm on stocks

Stalling may not mean crumbling. But a stall is a first step.

You should watch for several things:

and

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