Mega-cap tech spending scare hits Microsoft and Apple — fade the bounce
Thesis
Microsoft is in a historic June selloff because investors are losing patience with massive capital spending. Apple just had its worst day in a year after raising prices on Macs and iPads to offset rising chip costs — a sign margins are under pressure. Palantir is down over 30% this month despite the AI narrative. When the market's most beloved mega-caps all break down simultaneously on different fundamentals — spending concerns, cost inflation, and valuation compression — it signals a broader loss of confidence in the sector. Rather than catching falling knives, this setup favors riding the downside momentum.
Strategy approach
Build a short momentum strategy on mega-cap tech. Enter short a basket of MSFT, AAPL, and PLTR when each stock makes a new 30-day low on above-average volume. Use a 15-trading-day hold, a 4% stop above entry, and exit individual positions if they bounce 5% from entry.