"The recent pace of long buying in US TMT is the largest since Jun '25"

1. Financial conditions. "With the Fed on the precipice of a hike, it raises the question of whether or not we will see a tightening in broad financial conditions. We are starting from a place of ultra-loose, ultra-easy financial conditions, so it appears that there is little room to go but down (tighter) from here."

2. Oil price vs. vol. "Notably, while oil prices have surged back to near their Mar/Apr highs, oil volatility has been much tamer this time around, with the OVX Index trading at just half the levels we saw in March"

3. Hedge funds vs. TMT. "HFs have net bought US TMT stocks (Info Tech and Comm Svcs combined) in 10 of the last 11 trading sessions, and on a trailing 2-week basis in % terms, the recent pace of long buying in US TMT is the largest since Jun '25 and ranks in the 97th percentile on a 5-year lookback."

4. Breadth vs. Mag 7. "With the 90-day AD at just 252, barely positive, it wouldn't take much selling in the Mag 7 to pull the Index down."

5. Software revenue per employee. "S&P 1500 Software revenue per employee has gone parabolic. If you are looking for evidence that AI is starting to impact the real economy, this is exhibit A."

ICYMI