$Hims & Hers Health Inc.(HIMS)$ $Tesla Motors(TSLA)$ $Uber(UBER)$ I see breadth erupting into Fed week with the kind of institutional firepower that defines turning points. The convergence of record highs, Musk’s $1B Tesla buy, and a 94% priced-in rate cut sets up a roadmap that could shape Q4 leadership.
Institutional Breadth Ahead of FOMC
• NYSE: 2,687 advancers vs 1,613 decliners, 717 new highs
• Nasdaq: 6,585 advancers vs 4,231 decliners, 1,777 new highs
• Up volume: NYSE 630m vs 491m, Nasdaq 11.3bn vs 6.1bn
This isn’t noise; it’s accumulation into the Fed.
Indices Anchored by Tesla Catalyst
• Dow +49 pts (+0.11%)
• S&P 500 +0.47% ~ The S&P 500 index closed the day above 6,600 for the FIRST TIME EVER
• S&P 100 +0.71%
• Nasdaq 100 +0.94%: 6th straight record close 🚀
• Russell 2000 +0.34%
• MidCap 400 -0.06%
• VIX +6.3%
The NASDAQ 100 $QQQ just closed the day higher for the 9th day in a row! 🟢🟢🟢🟢🟢🟢🟢🟢🟢
The spark was Tesla: $TSLA +3.56% to $410.80 after Musk’s $1B buy, his first since 2020. On the 30m chart, Tesla cleared $400, tested $420, and held support at the 55EMA.
$TSLA stock just went from 🔴 to 🟢 on the year!
Fed Cut Expectations
• Futures price 94% odds of a 25bp cut
• Fed funds futures: the market’s betting line, not a guarantee
• Odds swing with Powell’s tone and incoming data
The 2-year yield is the key signal. If it breaks lower, liquidity expands and risk appetite accelerates.
Valuation Gap Between Small and Large Caps
• 5-year total return: $SML +78% vs $SPX +109%
• Forward P/E: 15.5x vs 22.7x
Small caps have lagged, but historically lead when easing cycles begin. The valuation gap is stretched and now offers opportunity.
Tom Lee said on CNBCClosingBell today that if the Fed cuts, the biggest beneficiaries will be:
1. NASDAQ 100 (Mag 7 + AI)
2. Bitcoin & Ethereum ~ “could make a monster move in the next 3 months”
3. Small caps & financials
High-Growth Small Cap Leaders
FactSet flagged 11 names with ≥14% sales CAGR through 2027 vs the SML index at 4.7%:
$CORT 41.6%, $LTC 32.1%, $GSHD 22.8%, $ASTH 18.8%, $ENVA 17.7%, $PLMR 16%, $HRMY 15.9%, $KNTK 15.7%, $AGYS 14.8%, $STRL 14.6%, $HASI 14.3%
Sector Rotation Scenarios
• If growth holds: $XLRE, $XLY, $XLK, small/mid caps
• If growth weakens: $XLRE, $XLV, $XLU, $XLP
The 2Y vs 10Y curve will dictate which path plays out.
Lessons From December 2024 Gamma Dynamics
In Dec ’24, a dovish Fed and mispriced 0DTE vol triggered a gamma squeeze that sent $SPX to new highs. Today’s setup, with low skew and cheap options, rhymes with that regime. SPX futures are already showing gap strength similar to that episode.
Company-Specific Drivers
• $HIMS -1.91% after FDA Commissioner Makary criticised its Super Bowl ad for omitting risks. With $679M ad spend (61% of opex), its reliance on marketing faces real regulatory risk. The 30m chart shows $54 as support, with $53 as the line to watch.
• $UBER +3.09% to $99.25, breaking all-time highs on strong volume. The chart confirms continuation above $98 resistance. I view Uber as Mag 8 material, alongside $SHOP, $ETN, and $RBLX.
Compounder Advantage
Free cash flow margin compounders have outperformed peers and the S&P 500 by 250% over 26 years. Sustained margin expansion and scale make them structural winners in both liquidity-rich and tightening environments.
Conclusion
Breadth is surging, Tesla reignited sentiment, and Fed cut odds are nearly fully priced. The parallels to Dec ’24, combined with stretched valuations and compounder momentum, make this one of the most pivotal setups of the year. Tomorrow’s FOMC will determine whether small caps rotate into leadership or the Mag 8 compounders extend their dominance.
👉❓Will this Fed cut ignite small caps into leadership, or do the Mag 8 compounders extend their dominance?
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