The Group Chat: Buongiorno

You might have been hearing about a possible "canary in the coal mine" for the markets recently... In short, the stock market has hit new highs recently – even amid higher volatility. But as a whole, that's not the case for the so-called "Magnificent Seven."

A Market Warning Sign You Can't Afford to Miss By Joe Austin, senior analyst, Chaikin Analytics You might have been hearing about a possible "canary in the coal mine" for the markets recently... In short, the stock market has hit new highs recently – even amid higher volatility. But as a whole, that's not the case for the so-called "Magnificent Seven." Regular readers know all about this group of mega-cap stocks. The list consists of Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA). Aside from Alphabet, the last time that each of the Magnificent Seven stocks hit a 52-week high was during the second half of last year. And on average, the entire group is down about 12% from their respective 52-week highs. Alphabet and Amazon are the only ones down by single-digit percentage points from their 52-week highs. The rest are down by double-digit percentage points. It's a notable reversal... In 2023, the Magnificent Seven accounted for more than 60% of the S&P 500 Index's total return. And in 2024, they contributed more than 50% of the total return. Given this outsize influence, the Magnificent Seven's health matters... especially that of Nvidia. In fact, our firm's founder, Marc Chaikin, highlighted Nvidia's prominence in his most recent edition of Market Insights earlier this month...   Nvidia's phenomenal growth story has fueled the market's surge to new all-time highs and ignited "animal spirits" in anything AI related. There's an old saying on Wall Street... "If the troops lead, the generals will follow." If Nvidia fails to make a new high in the next few weeks... then the troops – which are leading the charge to new highs – may fall into disarray. And as Marc also noted...   With the market already suffering from AI fatigue, buckle up... because these [earnings reports from mega-cap stocks] will be critical for a continuation of the bull market. All this has plenty of investors wondering whether the Magnificent Seven's recent performance is a warning sign... or just noise. History offers some clues about how things might play out from here. And it all has to do with those generals and troops... Recommended Links: Watch Live: The Most Lucrative New Trading Opportunity in Two Decades It's a new way to potentially double your portfolio in 2026 by predicting the biggest jumps on 5,000 stocks, BEFORE they occur. It shows how a colossal "divide" coming to U.S. stocks this year has opened the best opportunity in 21 years to apply this breakthrough new strategy today – including two free recommendations in a historic event backed by five Wall Street legends. Watch now, before it goes offline. Gold Is SOARING – Here's What You Need to Do Everything is lining up perfectly for a historic gold bull run... one that could send gold soaring well past $5,000 in 2026. One gold research firm says it has found the best way to get in for less than $50. Click here for the full details. Four Crashes... One Common Thread As Marc implied, the term "the generals" has nothing to do with commanding troops. It's Wall Street lingo for market-leading stocks. The original "generals" were large-cap stocks that dominated the market in the 1970s. Some of the biggest even had "General" in their name – like General Electric, General Motors (GM), and General Dynamics (GD). But the term evolved into Wall Street parlance for whenever a handful of stocks dominate the market's performance – just like the Magnificent Seven. History has some examples of when the troops and the generals didn't march in sync... Consider the "Nifty Fifty" right before the bear market during 1973 and 1974. At the end of 1972, the top five stocks in the S&P 500 accounted for about 23% of the index's market cap. Today, the Magnificent Seven group accounts for about 34% of the S&P 500's market cap. So that's significantly more concentrated than even the Nifty Fifty era. But in the bull market before 1973, if you didn't own the Nifty Fifty, you had a hard time making money in stocks. The generals were leading... but the troops weren't following. Then the bear market hit, and the Nifty Fifty got crushed. For example, Coca-Cola (KO) fell 69% from its high. Meanwhile, McDonald's (MCD) and Disney (DIS) fell 72% and 87% from their respective highs. The generals led, but the troops didn't follow in 1987, too... In the 12 months leading up to the infamous "Black Monday" crash, the Dow Jones Industrial Average moved to new highs. But the advance/decline line – which measures stock market breadth – was faltering. Take a look... The generals were marching alone. And that didn't end well. A similar pattern emerged when the tech bubble burst in 2000 through 2002... By 2000, tech stocks accounted for 33% of the S&P 500. Cisco Systems (CSCO) was the world's most valuable company with a roughly $500 billion market cap. And the tech-heavy Nasdaq 100 Index traded for more than 60 times forward earnings. In 1999, the Nasdaq Composite Index was up almost 86% and the S&P 500 rose almost 20%. But by late December that year, 3,213 stocks were up... while 3,780 stocks were down. Once again, the troops weren't following. At the end of 2002, the Nasdaq had fallen almost 80% from its peak. It wiped out most of its gain since 1995. Internet companies that were supposed to change the world either went bankrupt or sold for pennies on the dollar. And in 2008, we followed much the same script... Leading up to the crash, bank stocks were the single-largest sector in the index. The financial sector was worth about $2.9 trillion – roughly 30% more than tech at the time. Then came 2008. The average market cap of large-cap banking stocks fell by about 50%. Firms like Bear Stearns and Lehman Brothers got wiped out. The pattern is clear – extreme concentration in a handful of market leaders, weak participation from the broader market, then a reckoning. And right now, the recent stumble from the Magnificent Seven amid new highs in the S&P 500 looks uncomfortably familiar. So what happens next? History points to two possibilities... The first is a crisis in confidence in the AI trade. That's why Marc focused on Nvidia as the critical bellwether. The second is that money simply rotates into more exciting opportunities elsewhere in the market. To keep an eye on this, I'll be watching two things... The first is Magnificent Seven earnings reports across the next few weeks. I'll also keep an eye on subsector performance. In the Power Gauge, we track 21 market subsectors with the State Street SPDR family of exchange-traded funds ("ETFs"). Put simply, this tells us which areas of the market are gaining or losing strength. A healthy bull market needs both generals and troops advancing together. As Marc said in Market Insights...   When the leading stocks fail to participate in a move to new highs, rallies often falter. Right now, the generals are stumbling. Unless they regain their strength, they could be the canary in the coal mine. Good investing, Joe Austin Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.59% 5 20 5 S&P 500 +0.52% 113 267 120 Nasdaq +0.73% 23 55 28 Small Caps +0.75% 715 912 264 Bonds +0.44% Communication Services +1.41% 2 8 10 — According to the Chaikin Power Bar, Small Cap stocks are more Bullish than Large Cap stocks. Major indexes are mixed. *  *  *  * Sector Tracker Sector movement over the last 5 days Energy +2.73% Materials +1.14% Health Care +0.85% Communication +0.03% Consumer Discretionary -0.07% Consumer Staples -0.12% Industrials -0.17% Information Technology -0.4% Financial -1.03% Real Estate -1.34% Utilities -2.06% *  *  *  * Industry Focus Telecom Services 9 25 4 Over the past 6 months, the Telecom subsector (XTL) has outperformed the S&P 500 by +26.99%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #13 of 21 subsectors. Top Stocks HLIT Harmonic Inc. LUMN Lumen Technologies, NTCT NetScout Systems, In *  *  *  * Top Movers Gainers ANET +8.74% DDOG +6.31% NTRS +6.02% META +5.66% CVNA +5.15% Losers ABT -10.04% MKC -8.05% GE -7.38% HBAN -6.02% DLTR -4.63% *  *  *  * Earnings Report Earnings Surprises INTC Intel Corporation Q4 $0.15 Beat by $0.07 FCX Freeport-McMoRan Inc. Q4 $0.47 Beat by $0.15 AA Alcoa Corporation Q4 $1.26 Beat by $0.25 ISRG Intuitive Surgical, Inc. Q4 $2.53 Beat by $0.26 GE General Electric Company Q4 $1.57 Beat by $0.14 *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at diansastroxz.forex@blogger.com. For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized financial advice. © 2026 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. www.chaikinanalytics.com. 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