'Fast Money' traders talk stocks to watch in Q2

Key Concepts:

• Mag Seven underperformance
• Large Cap ex Mag Seven
• Semiconductor Index relative performance to S&P 500
• Ten-year Treasury yield as a proxy for the economy
• Stagflation concerns
• Gold market behavior as a cautionary tale

1. Mag Seven Underperformance and Market Breadth

• Main Point: The "Mag Seven" (presumably the largest technology companies) are underperforming the broader market.
• Details:
  • Mag Seven is down about 15% since the beginning of the year.
  • The S&P 500 is down about 5%.
  • Large Cap ex Mag Seven is down only 0.3% since the beginning of the year.
• Argument: Investors should diversify beyond the Mag Seven, as other market segments are holding up relatively well.
• Quote: "When you take those out and you look at the rest of the markets, they're basically flat this year... there is plenty that's holding up here." - Courtney

2. Semiconductor Index Relative Performance

• Main Point: The semiconductor index's relative performance to the S&P 500 is weakening, signaling potential market concerns.
• Details:
  • Semiconductors outperformed for a long time but stopped making relative highs against the S&P back in June.
  • Semis made a new relative low today.
• Argument: The outperformance of semiconductors has been a positive indicator for the market, and its weakening relative performance suggests caution.
• Explanation: The presenter oversimplifies the concept by stating that "as long as semis are outperforming QS or the Nasdaq, which are outperforming the S&P. Life is good for markets." - Tim

3. Ten-Year Treasury Yield and Stagflation Concerns

• Main Point: The ten-year Treasury yield is viewed as a proxy for the economy, and its current behavior suggests concerns about stagflation.
• Argument: Stagflation concerns make it difficult for the market to rally.
• Quote: "Mine is the tenure which was interesting today. I mean to me it's just you know as a proxy for the economy, right. And so today what it was telling us is concern, concern about stagflation." - Karen

4. Gold Market as a Cautionary Tale

• Main Point: The gold market's behavior, particularly its imperviousness to negative news, is a cautionary sign.
• Argument: The gold market is portending something "scary" and could be a prelude to economic concerns.
• Analogy: The presenter references the play/movie "Prelude to a Kiss" to illustrate the idea of something ominous foreshadowing a negative event.
• Quote: "Historically, news would come out to make gold go lower. It's no longer happening. So gold to me is a story that's sort of portending, I think something to Karen's point, sort of scary that's out there." - Guy

Synthesis/Conclusion:

The panel of traders highlights several key charts and indicators suggesting potential market headwinds. The underperformance of the Mag Seven, weakening semiconductor relative strength, concerns about stagflation reflected in the ten-year yield, and the unusual behavior of the gold market all point to a more cautious outlook. The main takeaway is that investors should be aware of these signals and consider diversifying their portfolios and being prepared for potential economic challenges.