Trading Desk

PLTR

SOXXhas broken above the generational ascending trendline that capped it since July.

XLF Higher asset yields can support bank income, but weaker borrowers and losses on bond portfolios put the other side of the balance sheet under pressure. My concern is that weaker growth and credit quality eventually outweigh the income benefit.52.8 can produce a tactical bounce. A sustained break opens further downside.

BABA

01810.HK

00700.HK

MAGS continues to support the tactical bullish case. The financing test extends beyond the hyperscalers. Owners of data centers and other digital infrastructure have to turn demand into cash returns after construction, operating and funding costs.

Michael Burry added to his AI shorts on September 22, I said these names had further to run—and that he would need another post explaining why he remained short. I posted this on the same day.

On September 28, he doubled down, shifting shorts into puts on MU, NBIS, CAT, SOXX and NVDA, increasing his PLTR and NDX put positions, and opening MET puts.

Here is how the nine names performed through the October 2 close:

And on October 2 he was back defending his thesis. Right on cue.

MSFT

DBA remains weak below 28.44 and its rising trendline. Crop supply is offsetting part of the energy shock. The September 30 USDA report showed corn stocks up 35% from a year earlier, while soybean and wheat stocks were lower. Weather pressure on sugar adds to that divergence. My concern about delayed food-cost inflation remains. For now, the futures basket is being held back by ample supply in some crops. Reclaiming 28.44 would put another leg higher back in play.

The tactical upside path from the FOMC low continues. NDX/NQ1! have made new highs. ES and SPX have bounced from their respective support levels, keeping the uptrend intact. RUT and DJI continue to lag, leaving the rally concentrated in technology. My long-term macro view remains bearish. I still expect a major swing high followed by a sizable decline in the months that follow.

EWY

399001

000001 remains capped by its descending trendline, with 3.8K holding underneath. September's official manufacturing PMI returned to expansion at 50.1, but uneven demand and rising input costs continue to hold back the recovery.

Mainland trading resumes on October 8. Holding 3.8K leaves room for another attempt at the descending trendline. A break below support extends the bearish path, while a sustained trendline breakout would turn the setup higher.

HO1!

Diesel is still tight. US distillate inventories fell another 2.3mn barrels and were 14% below their five-year average. Middle Eastern product exports continue to lag the crude recovery, keeping transport and industrial fuel costs under pressure.

09992.HK

XOP

US30Y

HSI

00700.HK

BABA

RUT DJI

The sequence this week matters more than any single line on a chart. Easing oil and yields gave the market room to rally on Monday, and AI leadership carried ES, NQ and NDX to new highs on Tuesday. Then the midweek surge in yields tested that rally. The indices recovered into Friday, but the recovery did not bring the rest of the market with them. That is the distinction between my tactical call and my macro view. The NQ long captured the move I expected; the remainder was stopped out when the retracement extended. I still expect NDX to extend its highs and SPX to print one of its own. RUT continued to weaken, and DJI keeps underperforming SPX. Businesses outside AI remain more exposed to the war's input-cost and financing pressures. September's flash PMI showed both strong activity and the steepest rise in input costs in nearly four years. The economy can look strong in the headline while the cost shock keeps building underneath it.

This is why I keep coming back to NVDA, SOXX and KOSPI. If the AI complex keeps carrying the indices while RUT and DJI fall further behind, another index high would only sharpen the divergence. My view remains that the rally can run into a major swing high in the coming weeks, followed by sizeable declines in the months after.

SOX NVDA SOXX

NVDA, SOXX and KOSPI remain the bellwethers of this bull run. NVDA has yet to hold above 230, SOXX is approaching generational resistance around 580, and KOSPI has already shown how difficult it is to hold above 7.1K. These are the names and levels I am watching to judge whether the AI trade can carry the indices further.

SOX has followed the dot-com script almost exactly. I first showed you this chart back in June, before SOX peaked. So much for "this time is different." If it continues to follow that script, my call for a major swing top in the coming weeks should play out. I still expect NDX and SPX to print new ATHs, but I do not expect SOXX to follow by printing a fresh ATH.

That said, 580 should be very strong resistance. If SOXX takes it out alongside NVDA breaking above 230 and KOSPI above 7.1K, my thesis of an eventual collapse should weaken. Given the broader cross-asset technicals, an oversold rebound in Treasuries could well provide the push these three need to make the break. Stay vigilant.

GOOGL