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SPX is pressing against its upper Bollinger Band — not an automatic sell signal, but worth noting as tech concentration, extreme positioning, and record valuations set the stage for sharper downside if megacaps crack. Meanwhile, retail keeps buying, cash levels stay thin, and skew suggests traders are quietly paying up for tail risk.
The Nasdaq’s market cap relative to U.S. M2 money supply has surged to a record 145%—overtaking the Dot-Com peak. Mega-cap tech dominance, record asset values, and concentrated leadership define today’s market backdrop, even as broader investor flows remain modest.
Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Broadcom have ramped up capex by 60% in the past year — six times the market’s pace — now accounting for over 30% of all U.S. non-financial capex. Despite record spending, free cash flow yield for the Big 7 sits at just 2%, fueling debate over whether the AI boom is a bubble or not.
Hedge funds cut leverage last week, with gross and net levels now on the lower side of their typical range, while tech saw its fastest net selling pace in over four months. Meanwhile, shorts in the Russell 2000 hit a new record, and MAG-7’s 34% weight milestone echoes past patterns of short-term rallies followed by steep pullbacks.