To The Moon

The indices: the Nasdaq set a record close, the Dow did not follow

The three indices pulled apart on Monday: the $NASDAQ(.IXIC)$ Composite rose 1.05 per cent to 27,477.31, a record close for it, having reached 27,544.06 at its intraday peak; the $S&P 500(.SPX)$ rose 0.66 per cent to 7,773.95, still shy of its own record close by less than 0.6 per cent; and the $Dow Jones(.DJI)$ Industrial Average added just 0.18 per cent to 51,267.90. The 10-year Treasury yield closed at 5.31 per cent, three basis points above Friday.

Put those three together and what made the high was not the breadth of the market but a handful of very large technology names. The Dow rose less than a third as much as the S&P, which still has ground to recover before its own peak. Two paths follow. Should the leaders keep climbing and the gap to the Dow stop widening, this is a move driven by earnings expectations, and a higher policy rate matters less. Should the Dow keep falling further behind, the money is simply crowding into the narrowest corner of the market, and if those few names pause the index has no second leg. The thing to watch is whether the Dow's gain catches up again over the next few days.

Hard drives: Western Digital and Seagate recovered, SanDisk and Micron still fell

The two drive makers sold off on Friday clawed back most of it on Monday: Western Digital rose 6.34 per cent to US$441.64 and Seagate 4.49 per cent to US$887.09. The trigger was a positive response from the sell side — Bernstein called the market's panic over Toshiba's expansion a storm in a teacup, kept its overweight ratings on both Western Digital and Seagate, and judged that the industry is still nowhere near meeting demand.

Two others in the same group did not follow: $SanDisk Corp.(SNDK)$ fell 0.92 per cent to US$1,704.16 and $Micron Technology(MU)$ 1.02 per cent to US$1,063.96. Both the fall and the recovery sit with those two drive names, which says the money coming in on Monday was buying a level that had fallen too far, not a changed view on the whole group. Two paths follow. Should SanDisk and Micron start catching up, the Toshiba report was a burst of sentiment and the shortage premise is untouched. Should they never follow, Monday was a rebound within a downtrend and the real disagreement is still where it was. The thing to watch is whether SanDisk and Micron catch up this week.

Foundries: Tesla's chip project turned to TSMC, Intel fell alone

$Taiwan Semiconductor Manufacturing(TSM)$ rose 2.75 per cent to US$485.80, having reached US$487.46 at its intraday peak, a 52-week high. The push came from Tesla's chief executive confirming early talks over Terafab, and the counterparty is TSMC. In the same news, SpaceX rose 7.63 per cent to US$171.09.

$Intel(INTC)$ went the other way, down 2.63 per cent at US$116.19 and the only clear laggard among these semiconductor names. Until now it had been the only named foundry partner in Musk's chip project, and the talks were read as squeezing that position. What is public so far is the phrase "early talks" and nothing else — no sum, no capacity, no timetable. Two paths follow. Should what lands be a contract with capacity and a term attached, TSMC is collecting a toll that can be counted. Should the talks stay at an early stage with no follow-through, Monday's gain has to be given back. The thing to watch is whether there is a formal disclosure on the next step.

Cerebras: Altman publicly called it a close partner and the shares rebounded

$Cerebras Systems(CBRS)$ rose 9.08 per cent to US$181.55. The trigger was OpenAI chief executive Sam Altman publicly calling it a close partner, which pushed down the question the market had been most worried about. The pressure came earlier: a tweet from SemiAnalysis had weakened the stock, with the concern centred on its demand position in this race. Its 52-week range runs from US$160.81 to US$386.34, and the price sits not far above the bottom of it.

Within a single day, a valuation knocked down by a tweet and pulled back up by a sentence, which says what prices this company is still the story rather than verifiable orders and deliveries. Two paths follow. Should specific supply arrangements appear next, Altman's sentence has something to be checked against and the price holds. Should there be only the sentence and nothing after it, this rebound is still travelling on the story and goes back the moment the wind turns. The thing to watch is whether the company puts out order or supply figures.

Power: the Energy Department confirmed a nuclear loan and Vistra closed higher

$Vistra Energy Corp.(VST)$ rose 3.48 per cent to US$144.89. The push was the US Department of Energy confirming a nuclear loan of about US$4.2 billion to expand nuclear generation. The backdrop is that data-centre electricity demand has pushed power assets back to the centre of pricing, and the names bracketed with it are Constellation, NextEra and NRG.

The money points at expanding generation, and the buyers of that power are data centres on long contracts, so the cash flow is more visible than for an ordinary utility asset. On the other side, a loan becoming generation means a construction cycle in between, and the current price already has several years of demand growth in it. Two paths follow. Should the data-centre power commitments be met on schedule, this line has something physical under the price. Should those commitments slip, the valuation moves first. The thing to watch is the price at which these power companies sign their next round of long-term supply agreements.

This is personal analysis and not investment advice.

💬 【Talking Point】

The $Dow Jones(.DJI)$ added 0.18 per cent on the day the $NASDAQ(.IXIC)$ set a record close. Would you rather own the index here, or the handful of names carrying it?

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