The dynamic featuring NVIDIA, however, could prove interesting moving forward. If that stock breaks down here, as it has been over the past three trading days, is it enough to sink investor sentiment? The yen/dollar rate nearly broke through the 160 level over the past few days and puts it in prime position for another BoJ intervention. Lumber’s huge plunge is consistent with the narrative that the global economy is slowing.

A lack of market breadth, such as what we’re experiencing now, is usually a bad thing as it indicates weakness almost everywhere else. When investors focus on just a half dozen stocks, it creates huge valuation disparities that can trigger potentially violent reversals. Even though Powell dialed back the Fed’s rate cut forecast at last week’s meeting, the markets seem to think that cuts are even more likely than before. Small-caps might be one of the ugliest charts in the equity markets today.

There’s a heavy “magnificent 7” influence here again. If Powell walks back his multiple rate forecast from earlier this year, which seems more likely than not at this point, we could see a short-term reversal in Treasuries unless investors view it as a reason to migrate to safety assets. It’s possible that the year-long leadership from junk bonds is finally starting to end, but it’s still a little early to come to that conclusion.