Santoli's Monday market notes: Pressure returns on tech stocks

Published Mon, May 10 20211:27 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. Friday's bounce in tech looking like a reprieve and not a pardon. High pressure and low conviction in growth names continues, but the clockwork bid in cyclical beneficiaries still holding the broad market pretty harmless near record highs. It doesn't always work so neatly and fit so well into a popular recovery narrative, but for now it is. At some point the cyclical/reflation groups will grow too crowded and unattractively valued, the way mega-tech did last summer, but unclear when that point hits. Right now earning-forecast momentum and inflationary vapors are strong enough to keep people betting in that direction. "Stable, predictable" 15-20% earnings from the digital giants is less interesting when copper has doubled off the lows and used-car prices are ripping higher. Already, growth and value are operating on separate tracks to a virtually unprecedented degree, with the correlation between these two styles over the past several months dropping below post-2000 lows. While this is mostly a matter of macro repositioning and investors' changing preferences, the news flow always provides ready excuses to reinforce the moves. In this case, Facebook under fire (oversight board, Apple app store, etc) and Citi with skeptical outlooks on digital ad players FB and GOOGL . FB in particular has been whipsawed hard by the great earnings/colicky stock reaction dynamic. Though this morning FB did close that gap left by its post-earning pop and then bounced a bit. Noteworthy that FB trades at virtually no premium to the overall market based on forward earnings, an unusual state of affairs. Makes it a battleground stock, with some value-sensitive buyers arriving on the scene. The post-Musk-SNL Dogecoin deflation is taking other crowd faves with it – the ARKK-iverse, TSLA, GME. Thumping of Trade Desk – a busted-momentum Cathie Wood name getting no help from a pointless stock-split announcement shows this whole area of the market is in an extended bout of buyer's remorse for the past three months. Overall market breadth is mixed, NYSE firm but Nasdaq quite sloppy. The main Nasdaq indexes are still holding above last week's lows and well ahead of the March lows, so this remains a messy rotation rather than a broad liquidation. Monday VIX pop above 17 nothing much to fuss over. Still in the range. And VIX futures show underlying stability rather than stress for now.

Traders on the floor of the NYSE.

Source: NYSE

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

Friday's bounce in tech looking like a reprieve and not a pardon. High pressure and low conviction in growth names continues, but the clockwork bid in cyclical beneficiaries still holding the broad market pretty harmless near record highs. It doesn't always work so neatly and fit so well into a popular recovery narrative, but for now it is.