AI Stocks Fuel Market Surge, But Warnings Emerge

Summary

The stock market experienced significant volatility, initially dropping on US-Iran tensions and potential Strait of Hormuz closure, but recovered to near flat due to positive spin on negotiations and ongoing AI enthusiasm. Despite broader market weakness, AI stocks, particularly those from partially government-backed companies like Intel, are showing strength, with Intel trading near all-time highs. Taiwan Semiconductor is breaking through historical trend lines, indicating investor emotion over logic. Concerns about "irrational exuberance" are growing, especially as AI stocks now comprise 40-50% of the US market cap, suggesting vulnerability to a sharp downturn. Micron is also performing strongly ahead of its earnings report, but its extreme Relative Strength Index (RSI) of 99.22 on SanDisk's monthly chart, coupled with negative divergences, signals a potential correction. Gold is trading within a wedge pattern, with support at $4,000 and resistance around $3,375, while silver is holding the $64-$66 level. Natural gas remains below its 200-day moving average but shows potential for a cup and handle breakout. Bitcoin is testing resistance at $67,250, with support at $63,200 on its ascending trend line. Key upcoming events include PCE inflation data and Micron's earnings.