According to The Kobeissi Letter, the Magnificent 7 stocks have experienced a significant drop, now representing approximately 31% of the S&P 500, a decrease from their peak of 35%. This marks the first time in years that these stocks are lagging behind both US and European markets, signaling a critical shift in market dynamics that traders should monitor closely.

According to The Kobeissi Letter, the Magnificent 7 stocks have sharply declined, now comprising approximately 31% of the S&P 500, down from a previous peak of 35%. This group is currently underperforming compared to both US and European stocks, a trend not seen in years, indicating a divergence from typical bull market behavior.

According to The Kobeissi Letter, the Euro Stoxx 600 index outpaced the S&P 500 by 17 percentage points this quarter, marking the largest recorded difference in performance. The Stoxx 600 saw a +12% rally in US Dollar terms, while the S&P 500 experienced a -5% decline. This significant performance gap highlights the relative strength of European equities over US stocks in this period, which could influence investor portfolio allocations.

According to The Kobeissi Letter, European stocks have outperformed the S&P 500 by 20 percentage points since mid-November, marking the largest disparity since the 2000 Dot-Com Bubble. Specifically, the EuroStoxx 50 index increased by 15%, while the S&P 500 decreased by 5%. Despite this significant performance gap, the valuation ratio between the two indices remains near its historical low, indicating potential undervaluation of European equities relative to U.S. stocks. This could suggest a potential trading opportunity for investors considering geographical diversification in their portfolios, with a focus on European markets. This performance shift may influence asset allocation strategies, particularly for traders seeking to capitalize on regional market strengths. (Source: The Kobeissi Letter)

According to @psarofagis, European stocks have started the year strong, outperforming US counterparts. Despite this, investment flows into European ETFs remain under a billion dollars, indicating limited investor interest. The trend needs to continue for at least six months to attract significant investor attention.