AI Market Flashes 5 Crash Signals as Nasdaq 100 Gains 30% and QQQ Sheds 7%
Updated
Updated · 24/7 Wall St. · Jun 15
AI Market Flashes 5 Crash Signals as Nasdaq 100 Gains 30% and QQQ Sheds 7%
3 articles · Updated · 24/7 Wall St. · Jun 15
Summary
QQQ has dropped about 7% in the past week and SPY about 4%, a wobble analyst Jonathan Wellum says looks more like the start of a deeper AI-led unwind than a routine pullback.
Wellum argues today’s AI boom matches all five conditions he says preceded the 2000 Nasdaq crash: explosive capex, extreme valuations, market concentration, speculative FOMO and uncertainty over earnings delivery and overbuild.
The warning is reinforced by stretched and deteriorating market data: QQQ trades at 32 times earnings, lost $12.7 billion in Q1 outflows, the 10-year Treasury yield sits at 4.53%, the VIX has jumped 26% to 19.87 and consumer sentiment fell to 49.8.
Wellum’s firm is rotating toward insurance, energy, materials, staples, utilities and healthcare, echoing sectors that outperformed after the 2000-02 bust, when the Nasdaq fell 78% and the S&P 500 dropped 39%.