# What’s Happening To The AI Trade?
**Date:** 2026-06-05  
**Source:** [YouTube](https://www.youtube.com/watch?v=6sAO-vNxe7o)

## Main Thesis
Nvidia, once the top-performing stock, is showing concerning signs of decline relative to the broader semiconductor sector and is accelerating towards a key support ratio. This shift in market leadership, potentially driven by Federal Reserve actions and a 'late cycle' rotation, suggests a broader market rebalancing away from concentrated tech dominance.

## Charts & Technical Analysis

### 1. SKOSPI (South Korean KOSPI Index) (daily)

**Bias:** NEUTRAL TO SLIGHTLY BEARISH (DUE TO VOLATILITY)
**Pattern:** bounce from 20-moving average, but still showing volatility
**Key Levels:** 20-moving average

The KOSPI index is shown on a daily chart, coming back to its 20-moving average. The speaker questions if it will see a bounce. At the time of recording, elastic demand seems to be coming through, but the speaker emphasizes that this is still volatility in a very important sector.

### 2. NVDA/SMH (Nvidia relative to Semiconductor ETF) (weekly)

**Bias:** BEARISH (FOR NVIDIA RELATIVE TO SEMICONDUCTORS)
**Pattern:** broadening pattern, declining relative performance
**Key Levels:** 0.300 ratio support

This chart shows Nvidia's performance relative to the SMH semiconductor ETF. Nvidia's relative performance has been declining since late last year, around the time the Federal Reserve made 'cuts' (likely referring to a shift in monetary policy or market sentiment). The speaker describes this as an 'altcoin season' for semiconductors, where other semiconductors started to perform well, and Nvidia became 'too big for itself' after a record run. This is seen as a normal broadening pattern, but Nvidia is accelerating towards the downside, getting closer to the 0.300 ratio, which has been discussed as a key level.

### 3. Sector Weight: Technology (6X-MSFT, AAPL, & NVDA) (long-term (1990s to 2024+))

**Bias:** NEUTRAL TO CAUTIOUS
**Pattern:** historical peaks and troughs in tech sector weight, recent surge
**Key Levels:** 36% weight in June 2024, 40% weight
**Historical Comparison:** late stage cycle

This chart from Duality Research shows the sector weight of Technology, specifically focusing on 6x-MSFT, AAPL, and NVDA. There's been a real shift from about 2025 onwards towards different areas of the market. The speaker notes that this tends to happen in a later stage of a cycle. The chart shows a significant increase in the weight of these tech giants, reaching 36% in June 2024, and potentially heading towards 40%. The speaker suggests that as IPOs like SpaceX, Anthropic, and OpenAI approach, it will become clearer what's happening with AI. The question is whether the 'picks and shovels' (hardware companies) will continue to do well, and the speaker advises watching the bonds market, particularly credit default swaps, and the 'Big Mag 7' stocks.

### 4. SPX (S&P 500 Index) (intraday (likely 1-minute or 5-minute))

**Bias:** BEARISH
**Pattern:** intraday volatility, potential for further downside
**Key Levels:** 7700 support, 8000 resistance

An intraday chart of the SPX is shown, highlighting recent price action. The speaker points out that the market has been dropping, with a clear break below a previous support level around 7700 and a move towards 7500. There's a potential for a bounce, but the overall trend is down. This chart is used to illustrate the recent market movements and the potential for further downside, aligning with the broader theme of market rebalancing.

## Regime / Cycle Analysis
The video discusses a shift in market leadership from concentrated tech giants (Nvidia) to broader semiconductors, likening it to an 'altcoin season' for semiconductors. This is attributed to Federal Reserve actions (cuts) and is framed as a 'later stage cycle' phenomenon where market leadership broadens or shifts. The speaker also mentions watching the bonds market and credit default swaps as key intermarket indicators.

## Key Calls & Predictions
- Nvidia's relative performance to semiconductors is declining and accelerating towards the downside, approaching the 0.300 ratio.
- The market is experiencing a shift away from concentrated tech dominance, potentially towards other sectors or a broader range of semiconductors.
- Watch the bonds market, credit default swaps, and the 'Big Mag 7' stocks for further insights into market direction and AI's future.
- The current market behavior, including the KOSPI's volatility and SPX's recent drops, aligns with a 'later stage cycle' where leadership shifts.

## All Instruments Mentioned
SKOSPI, NVDA, SMH, MSFT, AAPL, SPX, Bonds, Credit Default Swaps, SpaceX, Anthropic, OpenAI

---
*Generated by FX Evolution Monitor on 2026-06-05 20:00:18*