The Power of One: Tech’s Influence

Hello, my friends!

Today was all about one sector: Technology.

With the largest market share in global markets and an outsized influence on both the S&P 500 and the Nasdaq, it came as no surprise that tech stocks took the lead in the Daily Impulse, powering ahead while leaving the rest of the market behind.

As the day unfolded, the tech sector stood out in a major way.

It was the only sector firmly in the green, while others were flat or in the red, creating a clear and dramatic sector imbalance.

Tech Highlights Below:

• Apple, Microsoft, Amazon, Alphabet (Google), and Nvidia make up nearly 25% of the entire S&P 500

• Apple became the first publicly traded company to reach a market cap of $3 trillion in 2022, making it more valuable than the GDP of the UK!

• The tech sector accounts for over 50% of global research and development (R&D) spending

• Nvidia, the leader in AI chip technology, provides more than 80% of all GPUs used for AI

  • Nvidia shown in red, with S&P 500, Apple, Microsoft, and Amazon displayed below for comparison.

Let’s dive deeper into this tech dominance by analyzing today’s price action and its broader macro impact on the markets.

The Imbalance: Tech vs. The Rest of the Market

By the time the closing bell rang, the tech-heavy Nasdaq had climbed higher dwarfing S&P 500, and Dow Jones. The headlines screamed “Tech Soars to New Highs,” but the real story was hidden deeper in the data.

How can these sector imbalances be looked at properly?

Today’s rally didn’t lift all boats. In fact, other sectors lagged, highlighting a growing imbalance that’s been building for years. Industrials and financials, which typically balance the tech sector’s movements, ended the day in red.

This disparity is creating what we call a tech-driven market imbalance. The weight of just five companies—Apple, Microsoft, Nvidia, Amazon, and Alphabet—now accounts for a disproportionate share of the market’s overall performance.

Here’s what to watch for as the imbalance grows:

1. Increased Market Volatility: As tech becomes an even larger share of the market, any hiccup in the sector will cause outsized moves.

2. Regulatory Scrutiny: Antitrust actions could be on the horizon, which may temporarily disrupt the rally but ultimately solidify tech’s central role in the economy.

3. Tech Valuations: The price-to-earnings (P/E) ratios of many tech companies are reaching levels not seen since the early 2000s - speculative bubble of the dot-com era.

The rally we saw today isn’t just a flash in the pan, it’s part of a larger, systemic ongoing shift in the market.

The imbalances created by tech dominance are reshaping the way investors think, trade, and allocate resources.

NY Impulse- NVDA (+2.70%)🗽📈

9:30-12:00 Est

• The pre-market action was relatively calm, with markets holding steady, so all eyes were on the New York open. And it didn’t disappoint!

• Nasdaq came out swinging with a powerful surge, taking control and setting the tone for the day.

• I had my focus locked on the tech leaders, looking for any signs to capitalize on the momentum—and Nvidia (NVDA) led the charge.

• It quickly flipped its key resistance at 0DTE 120 into solid support, and once it gained momentum, it didn’t stop until hitting the next major supply level at 0DTE 125, just in time for the New York lunchtime cool-off.

• This kind of action showcases the strength and rhythm of the tech sector in today’s market!

Live Economic events⚡

• US New Home Sales - Units Actual 0.716M (Forecast 0.7M, Previous 0.739M)

• EIA Crude Oil Inventories Actual -4.471M (Forecast -1.43M, Previous -1.630M)

• Fed's Kugler: "The Fed should keep focus on reducing inflation and also shift attention to the maximum-employment mandate."

• NVDA 120 (0DTE Highest Level of Put Gamma)

• NVDA 125 (0DTE 2nd Highest Level of Put Gamma)

0DTE Levels: Zones of significant options volume in underlying assets, that can trigger an increase of volatility as the expiration approaches

These market levels are recalculated and updated daily, taking into account factors like gamma expiration, trading volume, and market volatility.

Coverage include Stocks, ETFs, Indices, Futures, and Crypto. For the most up-to-date levels and analysis, all information is available on MenthorQ.

NVDA Headlines 📰

• Several chip stocks, including Nvidia, Western Digital, and Lam Research, surged on Wednesday following Micron's strong quarterly earnings.

• Micron reported better-than-expected revenue and earnings, attributing its growth to strong demand for AI-related products.

• The market anticipates improved profitability in 2025, further fueling this rally.

For more details, visit the full article here.

Closing Mindset 🧠

Sector imbalances like today’s aren’t just about one sector excelling—they reveal the market's vulnerability when it relies too heavily on a single area for growth.

When tech soars, the indices follow suit. But when tech falters, the entire market feels the impact.

Understanding these sector dynamics is essential for staying ahead of market trends and protecting your portfolio from concentrated risks.

Stay sharp, and always consider how each sector contributes to the bigger picture.

Keep this in mind as you plan your next move!

Until next time,
Steve B
Founder, The Daily Impulse

Interested in learning how I manage risk and identify key levels in the market?

Join the community and be part of the journey!

We have exclusive monthly and yearly offers. Every plan is at your own pace.

New here? Join the newsletter below!

Important Disclaimer:

This newsletter is for educational purposes only and does not offer financial or investment advice. It should not be taken as a recommendation to trade assets or make any financial decisions. Please be cautious and ensure you conduct thorough research or consult with a financial professional before making any investment choices.