Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How One Stock Split Exposes the Bull Market's Selective Momentum
Transcript
- Lucas: So Shopify is up nearly thirty percent in five days, and Datadog is down fourteen and a half. Same week, same market, same sector bucket — completely opposite reactions. That's the bull market we're in right now. Luna: It's almost like the index is just a backdrop. The real story is these individual divergences. Lucas: Exactly. The S&P's sitting around seventy-seven fifty, up two percent on the week, the Nasdaq's up three. But if you zoom into the software names, it's not a rising tide lifting all boats — it's a very selective wave. Luna: And you know, if today gave you a sharper way to think about your own portfolio, that's what we're here for. The way these conversations stay ad-free is listener support — buy me a coffee dot com slash fexingo, if that's something you want to do. Lucas: Yeah, genuinely, every little bit keeps the lights on. So back to that Shopify number — twenty-nine and a half percent in a week. That's not a normal earnings pop. That's a repricing. Luna: What did they actually say? I know they've been pushing into AI tools for merchants. Lucas: Right, so the narrative is that Shopify's ai powered suite is starting to convert. They're not just a website builder anymore — they're selling the whole operating system for a retailer, from inventory to customer service to marketing. And the market is buying that story hard. Luna: Meanwhile Datadog — a monitoring platform, essential stuff — loses fourteen percent in the same week. What's the market so worried about there? Lucas: It's a growth slowdown. Datadog's customers are the cloud-native startups and enterprises that are finally feeling some pressure to cut costs. The company's guidance reportedly came in soft, and the market just took a knife to it. Luna: So we're seeing a really clear split between the AI winners and the ones that are more exposed to the old cloud cycle. Lucas: That's the clean way to put it. Shopify is riding the AI wave as a direct beneficiary — every merchant that uses their AI features is a data point that says 'we're growing.' Datadog is more of a barometer for how much companies are spending on the plumbing. And that spend is getting scrutinized. Luna: Is this something we can see in the broader indices? Like, the S&P hits a new high, but underneath, is the rally just these few names? Lucas: That's the million-dollar question. Look at the Russell 2000 — it's up one point eight percent on the week, not bad, but it's lagging the Nasdaq's three percent. So you're seeing some participation, but nothing like a broad melt-up. The market is rotating, but it's rotating toward specific stories. Luna: And the VIX is still quiet, right? I saw it's been hovering near lows even with the Dow dropping a thousand points a few weeks ago. Lucas: The VIX is essentially saying 'nothing to see here.' And that's part of the bull market psychology — investors are treating these divergences as noise, not as a warning sign. But when you see a stock like Datadog fall fourteen percent on a slightly soft guide, it tells you the market is still very sensitive to growth quality. Luna: So how do you position for that? Do you just stay in the big index funds and hope the winners keep carrying? Lucas: That's a real strategy, and it's worked. But the risk is concentration. If the mega-cap AI names stumble, the index takes a hit. The alternative is to be more selective, which is what some active managers are doing — they're reading the tea leaves on each stock's earnings call. Luna: And obviously, you don't need to pick individual stocks — you could just use an ETF that tracks the software sector, but even that would have both Shopify and Datadog in it. Lucas: Right, and that's the crux. A sector ETF gives you the average, but the average is being pulled in opposite directions. So you're getting a diluted version of a very strong signal. Luna: One thing I'm curious about: how much of Shopify's move is actually fundamentals versus just momentum? Because twenty-nine percent in five days seems like a lot. Lucas: I'd say it's a mix. Their earnings were solid, and the AI narrative is real. But there's also a momentum factor — once a stock starts moving like that, it attracts flows. You see the same thing in Palantir, which is up thirty-seven percent this week. These are stories that have captured the market's imagination. Luna: So is it fair to say the bull market is becoming a momentum market? Where the winners just keep winning until they don't? Lucas: That's a sharp way to put it. And the flip side is that the losers get punished fast. Datadog's drop shows that the market isn't giving anyone a pass on growth these days. You need to deliver, or you get sold. Luna: Now, the Fed is supposed to be a big part of this too. I saw the odds of a September hike tumbled after the July jobs miss. How does that play into the rotation? Lucas: The jobs miss is a big deal. It basically took a rate hike off the table for September, and that's supportive for growth stocks — lower rates make future earnings more valuable. So you get a double boost for names like Shopify: AI story plus a rate environment that isn't fighting them. Luna: But then why would Datadog fall? If rates are staying low, that should help them too. Lucas: Because it's not just rates — it's growth. Datadog's slowdown is company-specific. The market is differentiating between 'this company is growing because of AI' and 'this company is struggling because their customers are cutting back.' Luna: So the real lesson might be that the macro backdrop is supportive, but you still have to be selective on the micro level. Lucas: Exactly. The Fed is not the whole story. The market is rewarding companies that can show ai driven acceleration, and it's punishing those that can't. That's the lens to use right now. Luna: I wonder if this is sustainable. I mean, how long can the market keep separating winners from losers like this? Lucas: It can be a long time, actually. Think back to the late nineties — you had massive divergence between the tech leaders and the rest. It lasted years. The risk is when the leaders themselves start disappointing. Then the correction can be brutal. Luna: So we should keep an eye on the leaders' next earnings reports. Lucas: For sure. And also on the small-cap side — the Russell is up one point eight percent this week, which is decent, but it's still trailing. If that gap narrows, it could mean the rally is broadening. If it doesn't, we stay in this two-speed market. Luna: And the VIX being low is kind of the market saying it's fine with all this. But the low VIX might be hiding the risk of a sudden spike if a big name stumbles. Lucas: That's the irony. The low VIX is a sign of complacency, and when you have a market this selective, complacency can be dangerous. One bad print from a mega-cap could send the index down and the VIX up two, three times. Luna: So what's your takeaway for our listeners? If they're watching Shopify surge and wondering if they should chase it? Lucas: Don't chase the move. The time to buy Shopify was before the surge. If you're interested, wait for a pullback. And more importantly, use this as a reminder to check your own portfolio for concentration. Are you too heavy in the names that have already run? That's the real risk. Luna: And what about Datadog? It's down fourteen percent — is that a buying opportunity or a falling knife? Lucas: That's the tougher question. The market is telling you that their growth is slowing. You need to ask yourself if you believe the slowdown is temporary or structural. Without that conviction, it's a risky bet. I'd wait for the next quarter to see if the decline is stabilizing. Luna: So bottom line: the bull market is alive, but it's picky. And paying attention to those individual stories is more important than ever. Lucas: Exactly. The index can tell you 'we're up two percent,' but it won't tell you that Shopify is up thirty and Datadog is down fifteen. That's the part you have to dig into yourself. And that's the part that actually matters.