Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why This Bull Market Loves Small-Cap AI Bets
Transcript
- Lucas: So the S&P 500 is sitting at 7,742 after a 1.9 percent weekly gain, and the Nasdaq's up 2.6 percent. But the real headline is underneath the index. Palantir's up 35.6 percent in five days and Shopify's up 28.5 percent. Luna: Those are massive moves for companies that size. What's driving that kind of momentum? Lucas: Well, look at the broader tape. The Russell 2000 is up 1.6 percent, the NYSE composite is up 1.4 percent. It's not just mega-cap tech anymore. Small-caps and mid-caps are participating. That's the classic broadening of a bull market. Luna: But Palantir and Shopify aren't exactly small-caps. Palantir's market cap is over 200 billion at this point. Lucas: Right, but the momentum is coming from the same playbook. AI exposure, strong earnings, and a market that's hungry for growth beyond the usual suspects. Palantir's surge is tied to their AI platform and government contracts. Shopify's rally is about their merchant base and ai driven e-commerce tools. Luna: So the market is rewarding companies that can show AI is actually moving the needle, not just talking about it. Lucas: Exactly. And that's why you're seeing a name like Datadog get punished. They reported earnings that weren't bad, but the stock dropped 12.8 percent. The market's pricing in perfection. If you don't blow out expectations, you get sold. Luna: That's the flip side of the momentum trade. The bar is incredibly high. But what about the macro backdrop? We had that weak jobs report earlier this week. Lucas: Yeah, the Fed funds rate is at 3.63 percent and odds of a hike in September basically collapsed after the July jobs miss. That's actually fueling the risk-on tone. Lower for longer on rates is like jet fuel for high-multiple growth stocks. Luna: So essentially, a bad jobs report is good for the bull market. Lucas: In the short term, yes. It tamps down the fear of a rate hike, and that liquidity keeps flowing. The VIX is quiet, the S&P is at record highs, and money is rotating into anything that smells like AI. Luna: And it's not just software. Copper just hit its highest level ever. That's a real economy signal. Lucas: Copper's the metal with a PhD in economics. It's telling you that industrial demand is strong, and that's another sign this bull market has legs. It's not just a tech story anymore. Luna: So how should an investor think about riding this without getting burned? Lucas: That's the question. You want to be in names with real earnings, not just stories. Palantir and Shopify have actual revenue growth. But you have to size positions knowing that a 35 percent weekly move can reverse just as fast. Luna: It feels like a moment where discipline matters more than ever. And speaking of discipline, we've been talking about how this podcast is free and ad-free. That's a choice we've made, and it's only possible because listeners who find value in our conversations decide to support us. Lucas: Yeah, we don't run ads, we don't sell sponsored segments. If you want to see this continue, you can support us at buy me a coffee dot com slash fexingo. Every bit helps, and it keeps the show independent. Luna: It's a small way to keep the conversation going without any corporate agenda. So, back to the rotation—what's the risk that this broadening rally is actually a blow-off top? Lucas: That's always the worry. When you see speculative names like ARKK up 6.7 percent in a week, it does feel frothy. But the key is to watch breadth. If the rally continues to broaden, it's healthier. If it narrows back to just the mega-caps, that's a warning sign. Luna: So you're watching the Russell 2000 as much as the S&P 500. Lucas: Absolutely. The small-cap index is up 1.6 percent this week, but it's still lagging the bigger indices over the long term. If it starts to catch up meaningfully, that's a strong signal that the bull market is in a mature, broad-based phase. Luna: What about the AI trade specifically? Is it too crowded? Lucas: Look at Cloudflare, up 8.3 percent, CrowdStrike up 4.9 percent. The market is still paying up for AI infrastructure and security. But you have to be careful. These are high beta names. When the tide goes out, they'll drop faster than the rest. Luna: So it's about picking your spots, not just chasing the latest mover. Lucas: Exactly. And that's where a lot of individual investors get into trouble. They see a 35 percent move and think they've missed the boat. But there's always another opportunity. The key is to have a process and stick to it. Luna: I think that's a great note to end on. Appreciate the breakdown. Lucas: Always a pleasure. The bull market is alive, but it's not for the faint of heart.