When the market reaches a peak, they don’t send you a telegram. Nonetheless, market veteran Josh Brown foresees that we may have reached one of those moments. Expressing his views on the “The Compound & Friends” podcast, the Ritholtz Wealth Management analyst believes the current environment is signaling a likely peak.
The Nasdaq 100 surged by over 50% in 2023 and has already set off to a fiery start in 2024, driven by a steadfast operational efficiency focus and buoyant optimism regarding AI advancements. However, Brown stresses the need for the market to take a breather and, although he doesn’t predict market tops, he made a bold call about the foreseeable trajectory, at least for the near future.
Brown stated, “I would say there’s a better than 50% chance that the Nasdaq has topped for the year. I would say I am 100% certain, 99% certain that the Nasdaq has topped for the quarter…I think we have a lot of digestion to do in the Nasdaq 100.”
Pointing to Nvidia Corp’s frenetic trading activity, Brown exemplified the exuberant buying frenzy in the current market. He emphasized that a staggering $40 billion worth of Nvidia stock changes hands daily, characterizing it as an “algorithm casino” and “a ridiculous maelstrom of activity that serves absolutely no economic purpose.” Brown remarked, “The whole thing has just become such a freak show and that doesn’t happen at bottoms or in middles, that only happens at, at least short-term, tops.”
Last week, Brown announced that he reduced his Nvidia position for only the second time since 2017, citing that the chart “went vertical” and it felt like people had “lost their minds.” Nvidia shares concluded 2023 with a 239% surge and have already climbed an additional 47% since the beginning of 2024, as per Benzinga Pro.
Brown also indicated similar moves by several other mega-cap tech names over the past year, which he believes heightens the downside risk. Multiple factors are adding to Brown’s market sentiment, particularly the Nasdaq 100. Amazon.com Inc’s founder and chairman Jeff Bezos sold $2 billion worth of Amazon stock recently, OpenAI’s Sam Altman is allegedly seeking trillions for AI development, and numerous chip-related stocks have doubled or tripled within weeks.
Referring to the fervor required for Arm’s stock to double in three days on ten times normal volume, Brown asserted, “you just cannot get that in anything other than at least a short-term top.”
With an air of caution, Brown appealed, “Can we all relax? I’m very excited about AI, OK? I’m in the club, I’ve been talking about this sh*t before most of you were born. Let’s just calm down though. That’s all I’m saying.”
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