Batshit Tape
Within 1% of highs, yet 30% of stocks are down 10% or more the past month. And how is this being done? Feats of magic!
The past week.
And yet in spite of all this, we have clear winners.
More specifically.
On the other side of the ledger are sectors sensitive to high interest rates and/or hard mortgage market: banks, small caps, and a whole cadre old man stocks paying dividends insufficient to compete with treasuries.
Remember the ‘broadening out trade’?
It just got real fucking narrow.
Before the recent respite, Stocklabs spit out an unprecedented 6 consecutive oversold signals on our long duration flag, flirting with the 10yr COVID lows technical levels on an intraday scale before rebounds.
To put in plainly, markets are behaving like the economy is about to nosedive and the only thing keeping things together is of course the outside chance oil will drop and so will rates, thanks to a Trump TACO. Whenever we get a little hope that the Iran conflict will end, we are quickly reminded that bombings might continue after the mid-terms. Under this context, it’s close to impossible to time the market — so you might as well pursue two options.
Buy and hold your favorite names with some cash reserves to dollar cost average.
Go to cash and find solace in the calm solitude of being without prospects or danger.
Ironically, the areas of the market doing best now are the AI datacenter/semi plays, which of course are not really sensitive to GDP or oil prices, since they’re benefitting from a once in a lifetime datacenter build out.
Here are some interesting AI related names off the highs.
NXT -48%, GLW -39%, NOK -38%, CIEN -38%, FN -38%, MKSI -37%, VRT -33%, KLAC -32%, ARM -32%, ALAB -29%, FLEX -29%, CRDO -29% etc.
One of the more interesting areas of AI is the move to inferencing and storage. Without giving up too much to you free loader newsletter readers, it would BEHOOVE you to ignore the CPU scaling into this next phase of AI and the subsequent storage solutions for all of the data being compiled.
Providing rates can get the fuck down again and oil go under $80, we could be setting up for a generational run in stocks in Q4 and into Q1. My gameplan entails being aggressive from now until perhaps q2 2027, at which point it might be time to assess valuations and maneuver for a potential retrenchment.
See you fuckers next week.
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