MW Palantir, Coinbase and these other volatile stocks are too crowded, says JPMorgan. Here's the trade to make instead.

By Jamie Chisholm

The rush into so-called high beta names is a red-flag for the market

Stocks hover around record highs. Time for Jim Cramer, CNBC's hyperbolic stock picker, to freshly embrace the FOMO with another acronym: PARC.

It stands for Palantir, Applovin, Robinhood and Coinbase, momentum-driven stocks with, particularly in Palantir's case, fragile links to valuation norms.

Social media was not kind to Cramer's latest call, with the Inverse Cramer account on X noting what the acronym spells backward.

Indeed, it is the vigorous embrace of such high beta names - stocks that move by much more than the underlying market - that has many analysts worried.

One is Dubravko Lakos-Bujas, strategist at JPMorgan. In a note published Monday, he and his team observe that there have been three episodes already this year where investing style factors have seen "extreme crowding episodes."

In January, investors piled into quality growth, large size companies reflecting a desire to own the AI-linked mega caps. Then, as concerns about AI overspend infected sentiment and tariff policy raised recession fears, April saw a rush into stocks deemed low volatility, safer.

The latest bout of extreme crowding - currently in the 100th percentile - is in high beta stocks. And this spans both riskier low value alongside speculative growth plays, according to JPMorgan.

"In our view, this is driven by a combination of markets increasingly pricing in a goldilocks outcome (e.g. growth resilience and easing Fed expectations), tariff exhaustion (e.g. the so-called 'TACO trade') and institutional investors chasing more levered and speculative equity segments of the market," write Lakos-Bujas and team.

The overcrowding is particularly unsustainable because it has occurred at such speed. The move in positioning from the 25th percentile to the 100th percentile took place in just three months, which is the fastest in 30 years, says the JPMorgan team. In addition, short interest in high beta names has crumbled, they observe, meaning investors are inadequately hedged for any selloff.

"While some argue high beta crowding could persist, we believe the current 100%ile crowding based on our quantitative analysis not only presents a risk for this crowded segment, but is also a red flag for the broader market implying there is rising complacency in the short term," the JPMorgan team writes.

The bank has screened for stocks it considers high beta, the first 20 of which are shown below. Two of Cramer's PARC, Palantir (PLTR) and Coinbase (COIN), make the list, which also includes retail investor favorites like Nvidia (NVDA), Super Micro Computer $(SMCI)$ and Tesla $(TSLA)$.

So, if high beta does falter and impacts broader sentiment, what should investors do? Lakos-Bujas and his team note that when the low volatility factor began to unwind its crowding after April's jump, it did so in three months, which was also the quickest unwind in 30-years. It could see another resurgence.

"In our view, low vol once again presents an attractive risk/reward, especially with looming tariff deadlines (Aug. 1), adverse seasonality, and aggressive investor positioning," says JPMorgan.

"In particular, we recommend investors go long Low Vol Aristocrats, which have underperformed the market by 19% since April 8 when low vol crowding peaked at 96%ile," they add. Their top five stocks in that group are Coca-Cola (KO), Allegion $(ALLE)$, Intercontinental Exchange $(ICE.AU)$, CME $(CME)$ and CBOE $(CBOE)$.

Markets

U.S. stock-index futures (ES00) (YM00) (NQ00) are higher as benchmark Treasury yields BX:TMUBMUSD10Y dip. The dollar index DXY is down, while oil prices (CL.1) fall and gold (GC00) is trading around $3,364 an ounce.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6296.79    0.59%   5.51%   7.06%   14.38% 
   Nasdaq Composite                                                     20,895.66  1.51%   7.45%   8.21%   17.88% 
   10-year Treasury                                                     4.386      -5.30   3.70    -19.00  13.00 
   Gold                                                                 3371.6     0.58%   -0.38%  27.75%  40.59% 
   Oil                                                                  65.62      -1.81%  -2.38%  -8.70%  -16.13% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

U.S. economic data due Monday include the June leading economic indicators report.

Japanese Prime Minister Shigeru Ishiba said he plans to stay in power after his ruling coalition failed to secure a majority in the weekend's upper-house election. The yen $(USDJPY.FOREX)$ strengthened, but the country's stock and bond markets were closed on Monday.

Block shares $(XYZ.AU)$ are up sharply following news late Friday that the parent company of Square will join the S&P 500 this week.

Alaska Airlines $(ALK)$ grounded its flights after an IT outage on Sunday that affected its systems.

Stellantis shares $(STLA)$ (FR:STLAP) fell after the owner of brands including Jeep, Chrysler and Alfa Romeo warned of a $2.7 billion loss on write-downs, tariff impact.

A busy week of second quarter earnings will include Tesla $(TSLA.UK)$ and Alphabet $(GOOGL)$ after the close on Wednesday.

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The chart

U.S. President Trump's first term got off to a much better start for the stock market than did his second. But such has been the rally from this April's lows that bulls will be projecting a similar trajectory this time around. "We'll have to wait and see what the rest of 2025 has in store, but either way, the market has seen an absolutely remarkable comeback from the depths of the Tariff Crash just a few months ago," says Bespoke Investment.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   OPEN    Opendoor Technologies 
   GME     GameStop 
   PLTR    Palantir Technologies 
   PLUS    ePlus 
   AMD     Advanced Micro Devices 
   NIO     NIO 
   TSM     Taiwan Semiconductor Manufacturing 
   AAPL    Apple 

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-Jamie Chisholm

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July 21, 2025 06:38 ET (10:38 GMT)

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