Stealth Bear

So much for Black Monday. The Nasdaq 100 added US$650B in market cap after weekend social media calls for a repeat of the historic 1987 market crash on its 39th anniversary.

SpaceX ($SPCX) rose 8% on Tuesday after reporting a 161% YoY revenue increase of 

US$14.6B for Q3. A quarter where its AI segment called ‘Super Intelligence’ flipped Starlink for the first time. Elon Musk also hinted at a SpaceX and Tesla ($TSLA) merger that might not be too far away.

Musk has been in a gift-giving mood lately. He’s committed to giving a SpaceX share to every child in America next year (worth over US$10B), using the Trump Account program. His bigger gift to Wall Street investors were earnings call comments around AI.

SpaceX can’t find spare chips from Nvidia ($NVDA), Alphabet ($GOOGL) or Amazon ($AMZN). Musk called compute demand ‘ridiculous’ and the neocloud comeback was fierce: CoreWeave ($CRWV), Nebius ($NBIS), Hut 8 ($HUT) and TeraWulf ($WULF) all rallied after hours – a big move after last week’s fear around CoreWeave’s rising bond yields and debt-funded AI.

Super Micro Computer’s ($SMCI) massive earnings beat also lifted Asian indices, as well as its own stock price. $SMCI gained 13% after-hours following a Q1 earnings beat with US$19.1B in revenue.

But if you’ve been paying attention to these last few weekly Wrap’s, we’ve been talking about weaker market breadth and a handful of stocks driving the S&P 500 to record highs. It’s a paradox that analysts describe as a ’Stealth Bear’ market, and strangely enough, it might even be a somewhat positive situation.

For cap-weighted index ETF holders, the big stocks keep balances looking stable even in a weaker market. There’s less panic in the air because the headline index isn’t exactly crashing. And for stock pickers? It’s a world of opportunity. 

For instance, retail investor-favourite Netflix ($NFLX) is down 47% from its peak. It’s part of a 191-long list of stocks trading at least 20% below their 52-week highs. 

If the rally does broaden, the stocks that have been left behind could be where the next leg up comes from.

This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

Samy Sriram

Markets Analyst

Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.