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A lot has happened in the past week (sort of), and for those that need a refresher, my name is Emma and I’m filling in for Rob this week while he’s overseas. Don’t worry, Rob has assured me that even while on a previous trip to the Serengeti, he managed to make some trades, so you can rest assured he’s been paying attention and we’ve been in touch. I’ll give you this disclaimer now: Rob’s ability to lace pop culture references throughout his writing is not something I really possess. I’ve spent way too much time brainstorming how to analogize current markets to a universally beloved and widely recognized movie scene.
I was coming up short, until I was cajoled into seeing the new blockbuster Inside Out 2 on Saturday. For the uninitiated, Inside Out is a Pixar franchise about the personified emotions working inside a young girl’s mind. Joy, Anger, Sadness, and Fear are all main characters. It’s one of those kids movies that’s really for adults, plus I live in northern California and people really love to talk about their feelings here, so it was a natural choice for my cohort. It’s clever and charming, and voiced by some heavy hitting names. Well, in the sequel, our protagonist enters puberty and thus we are introduced to some new emotions like Anxiety and my favorite character Ennui, a French-accented avatar for the young teenager’s burgeoning boredom. And the lightbulb clicked.
I have been toggling between both anxiety and ennui this past week, and I’ve realized how much those seemingly opposite emotions have come to characterize markets. Last Thursday NVDA shares took a long-anticipated beat. See the chart below? It looks pretty similar to the QQQ chart Rob used for the PARABOLIC post last Tuesday. There is an obvious difference, which is those sharp, steep declines at the far right on the chart - starting to look like the top of the Empire State Building. I know, I know NVDA has since turned a corner. Profit taking is normal and end of the quarter means ETFs are rebalancing. But sell-offs are still anxiety inducing, even if a correction in the S&P500 would probably offer investors a reprieve. Sustained exuberance also takes take a toll on the nervous system, you know? Below the paywall I’ll provide a mid-year chart and an update to ROAR, and explain how Ennui is really the emotional driver (or result?) of current markets.
Related: Low Energy: Tease or Opportunity?