Overbought and under-owned: The Nasdaq’s relentless Squeeze leaves no exit

Stephen Innes SPI Asset Management

Yes, valuations are stretched, but so is everyone’s patience waiting for the pullback that never comes. The Nasdaq trading at 28x forward earnings is no longer a red flag—it’s the new dress code. In a market where AI is the driver, not the passenger, traditional valuation signals are losing their bite. Call it irrational exuberance if you want, but the risk isn’t in owning tech—it’s in not owning enough of it.

We’re in the middle of a classic positioning squeeze wrapped in a structural bull story. Macro tailwinds—easing geopolitics, a dovish Fed glidepath, and tariff fears fading into July—have crushed volatility and pushed financial conditions to their easiest levels this year. With retail chasing, vols compressing, and systematic flows reinforcing the tape, the market’s running on muscle memory now.

Everyone knows things feel extended—it's basically a polite version of “yeah, it’s frothy, but what else are you going to do?” The most under-owned bull market in recent memory is forcing hands into quarter-end. Those that missed the NVDA trade are now slinging second-tier AI names (think COHR, DELL, FN) like they’re next-gen royalty.

Multiple expansion is doing the heavy lifting, and with rate cut juice still to come, no one wants to be caught light into July 4th. The AI trade has spilled over into software and infra in a way that’s less about fundamentals and more about thematic beta—this is flow-driven repricing, not earnings re-rating. And despite a few micro-wobbles (MU, SNOW), the broader trend is intact.

If you’re looking for signs of a top, you’re not alone. But with tech dispersion still offering rotation alpha (MSFT moonwalking while AAPL naps), and the USD sliding downhill, the pain trade is still higher.

The irony? The Nasdaq is overbought, everyone agrees it’s overbought, and yet no one is selling. That’s not irrational. That’s structural.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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