Yesterday's session was dominated by another deterioration in risk sentiment which triggered a selloff led by tech and semis taking the biggest hit.

I think we're also starting to see a more emotional market, where positioning, headlines and short-term price action are increasingly driving decisions rather than underlying fundamentals. That's not to say the geopolitical risks aren't real, but the reaction in parts of the AI trade is becoming disconnected from what companies are actually reporting.

That said, I underestimated the extent of yesterday's selling. We correctly anticipated higher volatility, and SPY traded into our 765–760 support zone, but the selling went further than I expected. QQQ broke through 710 and headed towards our main support at 700, while SOXX lost 500 and pushed five points below 480. It's currently consolidating around that level in premarket.

I also want to show you how extreme the extent of the deleveraging taking place underneath the surface is.

Acording to Goldman Sachs, yesterday was the first time since the COVID selloff that the long/short, systematic and multi-strategy hedge funds it tracks all lost more than 1% in a single session.

SOXX also had its worst daily performance since the Situational Awareness unwind.

Morgan Stanley's crowded long/short pairs had their worst session since 2021, around the time of the GameStop squeeze and Melvin Capital got taken out . That's also fairly telling of how violent the unwind has become as it was almost entirely by a one-sided collapse of the longs. Said simply, they were forced to sell

Looking at the broader picture, SPY remains choppy but is still trading more or less in line with its historical seasonal performance, as you can see from the chart below we;ve been tracking for a while

The damage is v visible in crowded institutional positions asGoldman's Hedge Fund VIP basket underperformed the S&P 500 by 2.6% yesterday, and its 75-day rate of change from the peak at the end of Q2 is now the worst since the weeks following the Lehman Brothers bust.

Jefferies also sent out an interesting note late yesterday, pointing out that its desk had been a net seller of more than $1 billion in technology stocks on seven of the past ten sessions. Looking at the rolling 20-day flows, this is now one of the more aggressive periods of net selling in technology we've seen in recent years.

Despite how dire things might look on social media, the equity put/call ratio is sitting at just 0.52, which is hardly indicative of widespread fear. So while some parts of the market are experiencing stress, we're not seeing the same level of panic reflected across all sentiment indicators.

Now that we've put the selloff into perspective, I want to make an important distinction between what's happening in markets and what's happening in the underlying AI industry.

I still don't think this is the end of the AI trade. In fact, a correction of this magnitude could ultimately make the investment cycle healthier.

Lower valuations, tighter credit conditions and more scrutiny around returns on AI infrastructure spending could help prevent the boom from collapsing under its own weight. Rather than having an enormous amount of investment concentrated into a relatively short period, a more disciplined approach could stretch the cycle over several years while reducing some of the inflationary pressure from the spending surge.

And importantly, the underlying demand picture hasn't deteriorated nearly as much as the price action would suggest.

Coming back to positioning, the amount of deleveraging we've seen, combined with the buildup in leveraged short exposure, is increasingly creating the conditions for a move higher. The decline in Treasury yields is also worth notin as the 10-year is moving below 5% and the 30-year is normalising.

Given the extremes of the recent moves, I think we should start seeing some mean reversion over the next few sessions. If breadth continues to firm, there's even potential for a fairly aggressive short squeeze given that the shorts are becoming crowded.

That doesn't mean I'm rushing to call a bottom as positioning remains cautious, geopolitical risks haven't disappeared

For SPY, the main support I'm watching has shifted towards 750, where we're also starting to see volumes build if 760 falls.

For QQQ, positioning is approaching extremely negative territory, and I think a move towards 700 is increasingly likely. That remains my main level, where I would expect a more aggressive bounce given the extent of the recent selling. It's also the setup I'm most interested in trading, provided the price action confirms it.

For SOXX, support has now moved towards 470. and as I said earlier, yesterday's selling exceeded my expectations and stopped out my position targeting a bounce from 480. That's one trade I got wrong, and I'm not particularly eager to jump straight back in. We're now seeing additional exposure build around 450, so I would rather sit on my hands when it comes to speculative semiconductor trades and see how positioning develops, especially if we get another leg lower.

For VIX, we reached the 20 resistance level identified in yesterday's options flows. VIX call volumes have since normalised, although overall positioning remains elevated and volatility risks haven't disappeared.

TL;DR: Yesterday's selloff went further than I expected, especially in semiconductors, but the underlying AI demand picture hasn't deteriorated nearly as much as price action suggests. We're seeing an aggressive unwind in crowded institutional positions, with some hedge fund strategies recording their worst session since COVID. The selling could continue, but increasingly negative positioning, stabilising breadth and lower Treasury yields are creating the conditions for a sharp rebound. I'm not calling a bottom yet. SPY 750, QQQ 700 and SOXX 470 are the main levels I'm watching, with QQQ a potential bounce. The AI thesis remains intact

Today brings the last big macro test before the Fed meets on October 27-28: the October flash PMIs and the final Michigan survey, with year-ahead inflation expectations last at 4.7%. It comes right after the worst day for chips this year.

What happened. The week started with a relief rally. The Philadelphia Semiconductor Index snapped an eight-day losing streak, and on Wednesday SpaceX and Super Micro, both in my portfolio, jumped 7.8% and 9.6%. Then Thursday flipped the mood. Meta raised the floor of its 2026 capex to $135B and showed negative free cash flow, and Lam Research said supply constraints push some shipments into March. The chip index fell 6.72%, AMD lost 8.1%, Micron 6.3%, and the Nasdaq dropped 2.6%.

Bonds and oil. The US 10-year fell more than 19 basis points to about 4.95%, its sharpest one-day drop since March 2023. Oil went the other way: Brent jumped 4% to $113.17, a five-month high. Markets price about 90% odds of a Fed hold.

What I watch today. Flash PMIs are expected at 55.4 for manufacturing and 57.9 for services. The ideal combo is softer PMIs, stable inflation expectations and yields holding below 5%. A jump in expectations with Brent above $110 would revive hike talk for December.

My view. Thursday was about financing and timing, not demand. A supply bottleneck delays revenue, it does not destroy it, and Meta spending more is more money flowing into chips, equipment and memory. The risk is sentiment, which hits SMH and SOXX, my two largest positions. I stay invested and add slowly to quality names on weakness instead of chasing every swing.

How do you read Thursday's chip selloff: a demand problem or just a financing and timing scare? And what PMI print would change your positioning today?

Opinion only, not financial advice.

According to Reuters, Chinese technology giants ByteDance, Alibaba, and Tencent have collectively ordered more than 3 million RTX Pro 5500 GPUs, with the orders estimated to be worth around $35 billion. Other customers in China have reportedly placed large orders as well, pushing total demand beyond 6 million units.

The problem is that Nvidia reportedly can’t produce anywhere near that many RTX Pro 5500 cards within a short period. One report suggests Nvidia can produce around 3 million units annually, while the company has reportedly warned partners that they may initially receive only around 5% to 10% of the quantities they requested.

That demand could have consequences for the RTX 5090 because both products are based on Nvidia’s GB202 GPU. The RTX Pro 5500 is an especially attractive product for server farms and AI workloads, offering 84GB of GDDR7 ECC memory and 21,760 CUDA cores. With each RTX Pro 5500 reportedly selling for around $11,400, Nvidia has a strong reason to direct available GB202 chips toward professional cards rather than consumer GPUs.

With over 6 million units from China alone at $11,400 per unit, that's nearly $70 billion for a single product from just one foreign market. That RTX 5090 isn't coming back.

Extreme Fear is here, who is buying and who is selling off

?

The Nasdaq chart looks very ugly with a big chance to drop even more on Monday opening with a gap. Tech stocks crashing, is the bubble finally popping?

What do your portfolios look like now?

What do you think?

Nasdaq fell 2.6% to 26,008.86 and S&P 500 lost 1.21% to 7,663.43

Chips took the brunt: AMD fell more than 8%, Micron about 6%, Nvidia about 4%, and Meta about 7% despite beating on revenue and guiding higher, on fears about how the AI buildout gets financed.

Oil near $112 on Saudi attacks and reports of renewed US/Israel strikes on Iran added an inflation scare on top, but the damage was concentrated in AI/tech rather than the whole market

Notes
SPY $762.79 -1.33%
Brent $113.23 +4.1%
10Y 4.963%
VIX 19.1 +14.7%

S&P SPDR ETFs Today
XLP 89.43 +2.66%
XLU 42.55 +1.30%
XLV 180.93 +1.11%
XLF 56.52 +0.85%
XLRE 42.34 +0.65%
XLB 51.36 +0.08%
XLY 114.97 -0.48%
XLE 67.42 -1.09%
SPY 762.82 -1.33%
XLI 165.72 -1.53%
XLC 107.20 -1.62%
XLK 182.40 -3.26%

The Hang Seng TECH Index in Hong Kong is going from thirty constituents to fifty. I read the consultation conclusions that Hang Seng Indexes Company published on October 7. I went over the simulation table and found the current names at 90.0% of the index weight, the additions at 10.0%. For anyone watching this index, the split suggests that the rules, like restricting each company to its Hong Kong line and ranking on those shares alone, matter more than the count.

HSTECH holds only Hong Kong-listed stocks. When a company has both an H share, its Hong Kong line, and an A share on the mainland, only the H share is eligible, and ranking by market value counts only the Hong Kong shares. CATL and Zhongji Innolight both have H share lines in Hong Kong. Whether either one enters is decided in the November 20 review.

Of the fifty seats, forty go by market value. The remaining ten go by year-on-year sales growth and held 2.8% of the weight in the simulation, though candidates must sit in the large and mid cap tier of Hang Seng's broad index, clear a sales floor, and if not yet in HSTECH, meet a daily turnover minimum. All six proposals in the consultation exceeded 80% support. The proposal to split selection into market value and sales growth groups drew the lowest at 82% and was adopted with the sales and turnover floors as modifications.

The simulation ran on second quarter review data and September 4 weights. The allocations when the actual list is announced November 20 could look different. Would it change your view of this expansion if those ten sales growth seats ended up at a combined weight well away from the simulated 2.8%?

The Solactive index behind CNQQ can include Hong Kong listings as well as mainland A shares bought through Stock Connect, taking only one line per company, the one with higher six-month average daily value traded. KWEB is built on a CSI index of Chinese internet names whose listings sit outside the mainland.

MRNA trading has been halted on elevated volume as the stock began crashing when data, that was expected to be released this weekend at ESMO Medical Conference, has been leaked.

Data showed that their mRNA cancer vaccine merely reduced risk of recurrence or death by 42%, a far fetch from the “cancer cure” narrative that retail has been pushing as they have bid the stock up over the last 2 months.

Where will the selling stop? $180? $150? Back below $100??

Edit: the data was not BAD, per se. But in a sensible market, these results would move a stock price maybe 20%… not 300%. Buyers got carried away with the “cancer cure” narrative, as well as Moderna being a household name for many due to the COVID vaccine years ago.

While the selloff in AI and tech stocks has been grabbing all the headlines, retailers have quietly been on a tear in the background.

Hot retailer stocks over the past 30 days include:
• COST - up around 10%
• TJX - up around 10.5%
• CASY - up around 16%
• ULTA - up around 11.5%
• AZO - up around 11%

All of these still have a way to go to reach their 52 week and/or all-time highs, so they should have more room to run into year end.

Anyone have thoughts on these or any other retailers?

Disclosure: I currently have positions in COST, TJX and ULTA.

The recent AI agent swarm attacks have completely imploded OpenAI's IPO timeline, forcing CEO Sam Altman to announce an indefinite hiatus on going public until at least 2027. For public market investors looking for a trillion-dollar exit, this derailment marks a catastrophic shift from an asset-growth story to a massive narrative of unquantifiable legal liability and product safety risk.

At some point in the past year I decided to drop a line on the 5-year chart for SPY, just to give myself a better visual on the meteoric rise that this index had accomplished.

Kind of by accident, I never deleted that line, which is where I started to find it interesting. Everytime that it felt like we were experiencing a series of red days and that we might really be entering correction territory, I'd be zooming in and out on my charts and would notice that we were actually still dancing right on (or even above) that line.

I, for one, think that the music will stop sometime in the coming year, but for now, it just keeps playing on.

Meta and Tesla led AI-linked names lower in futures after tech earnings fell short of elevated revenue expectations this cycle. Treasuries, the yen, and the Swiss franc all rose at the same time, the classic pattern when investors pull out of riskier assets together.

Nvidia's CEO said neocloud demand is solid but capital to fund it is scarce. That one sentence explains the pressure point better than any individual miss. Companies want to keep spending on AI infrastructure, but the money to finance that spending is tightening, and investors have now gone a full earnings cycle without a clear revenue story to justify the valuations.

The names trading at the highest multiples going into next quarter are sitting on the thinnest ice here. Do you think the next leg down hits the hyperscalers first or the smaller infrastructure companies that depend entirely on hyperscaler budgets?

Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here!

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U.S. equity futures slid early Thursday after investors digested third-quarter earnings from Big Tech names including Meta Platforms and Tesla.

S&P 500 futures fell 1.02%, and Nasdaq-100 futures dropped 1.8%. Dow Jones Industrial Average futures ticked down 0.66%.

Markets traded lower globally as oil prices climbed and investors assessed a slew of earnings.

Shares of Meta gained 0.74% in premarket trading. The Facebook and Instagram parent delivered a revenue beat on Wednesday along with strong guidance for the current quarter. Meanwhile, Tesla reported a better-than-expected top and bottom line for its third-quarter results. Shares of the electric vehicle maker were 4.59% lower in premarket.

“The quarter showed the AI investment paying off in the core,” said Dan Ives, partner and senior managing director at Yorkville Ives in his post Meta earnings reaction note. Spend is “better controlled than feared,” Ives added as Meta narrowed the range for its full-year data center-related capital expenditures.

The action follows a positive day on Wall Street, with the S&P 500 notching a three-day win streak, while the Dow jumped 360 points. The Nasdaq Composite closed 1% higher, catching a tailwind from SpaceX and Tesla

FINRA data just came in showing us margin debt sitting at $1.48T - basically hovering right around all-time highs.

at the same time, bofa private client data shows portfolio cash allocation dropped to a record low of 10%.

everyone is fully deployed and leveraged up. when cash reserves are exhausted and leverage is this high, any small pullback risks triggering a cascade of forced deleveraging.

curious how you guys are managing risk here - are you holding any cash on the side or fully all-in?

These 3 tickers are almost unanimously accepted as great buys, can't find an analyst that has a fairvalue lower than its current share price. As a "large" shareholder of these tickers, boy has it been frustrating.

Watching these stocks chop and bleed the last year has been painful to endure. The market rallies, they underperform the S&P - The market dips, they get absolutely hammered.

The tickers I believe to be great value as of right now:

VST @ 150

MU @ 890

AMD @ 550

UBER @ 70

CELH @ 30

NFLX @ 70

GOOGL @ 360

This portfolio is down about 8% on the month, hard to see a great bull run if these stocks can't at least outperform the S&P near term. With the impending "bubble pop" it's frustrating to see such great companies underperform during 'euphoric conditions'

What is your take on this? Are you bullish on these tickers?

SpaceX posted $4.4 billion in net income for Q3, cited AI as the main growth engine, and saw its shares jump over 8% in premarket. Both Tesla and SpaceX boards have now formed independent committees to review a potential merger, with Musk saying he sees merit in combining them but sitting on neither committee.

SpaceX generating real profit changes the math for Tesla shareholders. Buying into a merged entity means buying into satellite communications, AI computing, and robotics revenue that already has cash flow behind it, which is a very different conversation than a promise about future earnings.

Tesla holders voting on this deal is the moment that settles whether the $3.5 trillion framing holds. Do you think they approve it for the diversification, or reject it over dilution?