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The stock market’s “bro bubble” is bursting, says Bank of America
The call from chief investment strategist Michael Hartnett.
With the S&P 500 slipping into negative territory for the year, led by a vicious sell-off in the Mag 7, the signs are everywhere. The markets are in the midst of a serious vibe shift.
The every observer seems to have a diagnosis to offer. Is it tariffs? Creeping concern that the AI capex orgy might end badly? The recent run of unsettling economic data?
Bank of America Chief Investment Strategist Michael Hartnett and his team have an interesting take on the recent slump (which to be fair has only taken the S&P 500 down 4% from its recent record high): the “bro bubble” may be bursting.
“Post-election VWAPs (volume weighted average price) that need to hold to prevent nervous ‘nouveau bulls’ selling… Meta $639, Palantir $80, QQQ $519, SPY $597; note Bitcoin VWAP since election $97600 and inability to stay >$97k was first sign ‘bro bubble’ popping (VWAP for Tesla $371).”
Translation: these retail favorites, which soared after the election, are approaching or breaching a key technical level known as a VWAP, best understood as the point where the average holder slips underwater and is losing money on the trade.
People don’t like losing money. And the realization that they are tends to force a decision on whether to stick with a trade or slam the sell button. Over the last week, they’ve been opting for the latter.
