Daily Pulse · · 10:30 CET · 7 min read · market · MAGS
In this edition
Pattern alerts
- MAGS 72.51-record-close-72.97-on-21-sep-plus-5.5-in-september-plus-15.7-in-three-months BULLISH
- META 777.59-plus-36-in-september-muse-agent-carries-the-group WARNING
- RSP 210.26-minus-3.8-in-september-equal-weight-falls-while-megacaps-rise WARNING
- TLT 79.42-minus-8.1-in-three-months-10-year-4.40-to-5.16 BEARISH
- IWM 281.66-minus-4.8-in-three-months-floating-rate-borrowers-lag BEARISH
The Roundhill Magnificent Seven fund MAGS made a record close of $72.97 on Monday and finished Thursday at $72.51. It is up 5.5% in September while the S&P 500 fund SPY is up 0.3% and the equal-weight S&P fund RSP is down 3.8%. Over three months MAGS is up 15.7% against 4.9% for SPY, and in the same three months the US 10-year Treasury yield climbed from 4.40% to 5.16%. Tech stocks are supposed to suffer when rates rise, because their value lies far in the future and a higher discount rate shrinks it. This group is doing the opposite. CNBC framed the move on Thursday as the megacaps becoming a safe place to hide from a bond market that is punishing both stocks and bonds. Today's diary entry tests that idea: what the seven did this month, what they did in every earlier stretch of rising yields since 2017, and what their cash flows and valuations say about why.
The month: one group, seven different stories
"The Magnificent Seven" sounds like one trade. The numbers show seven. In September Meta did most of the work, up 36.0% after unveiling its Muse shopping agent and naming Walmart and Best Buy as partners. Apple added 6.0%. Nvidia, Tesla and Alphabet rose between 1% and 3%. Microsoft fell 1.8% and Amazon 4.0%. Over three months the picture shifts: Microsoft is up 36.5% and Meta 39.5%, while Alphabet and Tesla are roughly flat.
| Fund or stock | September to date | Three months |
|---|---|---|
| MAGS (the seven) | +5.5% | +15.7% |
| Meta | +36.0% | +39.5% |
| Apple | +6.0% | +14.7% |
| Tesla | +2.7% | +0.6% |
| Nvidia | +1.8% | +13.0% |
| Alphabet | +1.0% | −0.8% |
| Microsoft | −1.8% | +36.5% |
| Amazon | −4.0% | +6.4% |
| S&P 500 (SPY) | +0.3% | +4.9% |
| S&P 500 equal weight (RSP) | −3.8% | +0.3% |
| Small caps (IWM) | −3.9% | −4.8% |
| Long Treasuries (TLT) | −3.4% | −8.1% |
Total return, closes of 24 September. The comeback is recent: from the close of 2 January to Thursday, MAGS is up 11.0% against 13.2% for SPY. For most of the year the group lagged, as the AI trade moved away from the largest companies toward chipmakers, memory and power. The gap between MAGS and the equal-weight S&P is the other side of the same story: the average stock is down this month, and the index is held up by a few of its largest members. That is what index concentration looks like in practice.
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