The discussion emphasizes how a small number of tech stocks, including Apple (NASDAQ: AAPL), have driven the market higher, but a single major miss in earnings from another key tech company could trigger a significant correction. The market is seen as overvalued, trading at high multiples, and potentially needing a break. The “sell in May and go away” strategy is mentioned, but the focus is on the potential impact of early earnings reports. Salesforce’s recent earnings miss and subsequent stock drop are cited as an example of how one significant failure could start a domino effect in the market.

Transcript:

Second.

You’ve got a very small number of tech names that basically pulled this market higher.

Right. You know, one of them, Apple, sort of, you know, it fell out of the cycle.

It seems to me that if one or two more do, probably for earnings reasons, that that is the thing that causes the major deceleration.

They don’t all have to have bad financial news or bad quarters.

It’s like if one more falls out of bed, that could really cause a correction.

Yeah.

I think sell in May and go away has been somewhat successful over the years, but I don’t think on any sort of draconian drop every May.

But I think that the market’s tired.

We’re trading at overall multiples that are way above normal and compressing back and with earnings starting to roll over for some companies.

And I mean, they were reasonably pretty good for the first quarter and we’ll see how second quarter is.

But yeah, I think Barry’s right about this because the market needs to take a break.

Well, let’s come back to this.

This is a tough one to call.

I would guess what we do is we come back to it after the people, the early earnings get posted in the next earnings season.

We don’t have to wait for the whole thing, but some of these guys announce fairly early in the cycle.

I think if there’s one major miss among these really big tech companies, just one is enough to start the market, cause it to go into reverse.

Well, and you did see that where Salesforce missed, they just got obliterated.

And that’s been a very strong, you know, software, you know, stock for the last five years.

So I think you’re exactly right.

If there’s one tipping point from one of these magnificent seven or somebody else that’s pretty prominent, that could set the dominoes in motion.

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