Last week’s bull trap reversal saw no downside follow-through today as buyers defended key levels, semiconductors rebounded from its 200 day moving average, and volatility declined.
The first oversold conditions since the mid-September low probably helped even though anxiety is sky high ahead of this week’s earnings and the Fed.
Read Monday’s Technical Tape
“The price action for the S&P 500 is a reflection of the collective behavior of market participants, and those participants were eager buyers of the S&P 500’s constituents and the derivatives tied to the index itself the last time the index traded in the ~7,500 to ~7,620 zone. If they are no longer eager buyers at those same prices, that tells us something meaningful about the collective expectation for where the S&P 500 will be trading three to six months from now. Support holding is a vote of confidence. Support failing is a change of mind. We don’t want to see a change of mind.”
- Steve Deppe
Jonathan Krinsky (BTIG) is not the only one expecting a retest of the 200 day before market conditions improve for real.
With everyone looking lower and shorts pressing, I wonder if this will be the first time the market will finally reward those playing not to lose instead of to win into these known risk events. And more importantly, how that will determine the fate of many investor and trader portfolios by year end.
When Ken Griffin talks, everyone pays attention! At least everyone who truly cares about being on the correct side of the key trades and the market.
Watch last week’s 48 minute interview with Griffin and/or read my notes.
The AI investment trade is undergoing a significant reassessment as investors unwind concentrated positions in semiconductors, hyperscalers, and other AI-related companies. What had become one of Wall Street’s most crowded trades, buying AI and selling almost everything else, has begun to reverse amid a plethora of concerns.
Watch the video and/or read my notes.
RADAR
Retail investors are no longer interested in buying this dip, Anthropic drops its long-awaited IPO prospectus, Elon Musk warns of guppy-level death for hundreds of AI cloud firms, everyone is asking whether stocks are facing another Minsky moment, Whitney Tilson thinks we only have the Magnificent 3, meanwhile seven major funds keep betting on the same AI stocks, fyi doctors who use AI have an advantage over those who refuse, and in this new era having excellent judgment skills are a must!
In 1977, psychologist Albert Bandura published a landmark paper in Psychological Review on a question: what makes people take action, and what makes them give up?
His research pointed to something he called self-efficacy: the belief in our own ability to succeed.
People who believe they can handle a challenge are more likely to take it on, put in the effort, and persist when things get difficult. (A must for all of us!) And that belief grows stronger through action, when we prove to ourselves what we’re capable of.
Hope keeps the door open. Belief walks through it.” - Matthew McConaughey
Watch this important video from this modern day philosopher king.
“I don’t think anything is unrealistic if you believe you can do it. I think if you are determined enough and willing to pay the price, you can get it done.” - Mike Ditka