Twenty-one pairs. Sixty days. One CNBC analyst with a spreadsheet and a dream.
The "Magnificent Seven" is dead, according to CNBC. The cause of death is a rolling 60-day correlation of daily returns. Not a scandal. Not a recession. A rolling window.
Do the math. Seven stocks make 21 pairs. CNBC checked every pair, like a couples therapist with a Bloomberg terminal. Apple and Tesla aren't speaking. Nvidia sleeps in the guest room. Microsoft and Meta are staying together for the shareholders.
Here's what a technical analyst notices. The group was never a group. Seven companies sold different things to different people. Apple sold phones. Tesla sold a man's mood. Amazon sold you a spatula at 2 a.m. A reporter put them in a basket and gave the basket a name from a 1960 Western.
Now the basket has come apart, and the headline says it's "time to pick winners and losers." Time? Who scheduled that? Was there a calendar invite?
Retail traders will read this and feel a rush. Finally, a reason to sell the one they bought in 2023 and buy the one that went up Tuesday. Diversification, but with extra steps and a margin call.
Picking winners from a correlation chart is like picking a spouse from their cholesterol numbers. Informative. Deeply unromantic. Still going to end badly.
I draw lines on charts. The lines don't care about 60-day windows. The lines don't care about anything. That's why I trust them.
The Magnificent Seven is over. Your portfolio just became seven separate ways to be wrong.
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