G-Test conditional order acceptance
SCALE-0924
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G-Test conditional order acceptance
SCALE-0924
G-Test conditional order acceptance
SCALE-0924
G-Test conditional order acceptance
SCALE-0924
G-Test position Preview position acceptance
SCALE-0924
Michael Burry just added to his shorts in various AI names, including MU, NBIS, SOXX,PLTR. If you've been tracking his record over the past 30 years or so, you'd know he's a seasoned value investor who's been more right than wrong. But when it comes to timing, I guess God gives with one hand and takes with the other. I think he'll have to put out a second post explaining why he remains short after these names keep grinding higher for a bit in the coming weeks.
NDX printed a new ATH before the close. I was very explicit about a fresh ATH in the previous Tactical Positioning. Even if you had only gone long at Sunday's futures open, you'd be up about 1,000 handles on NQ. Congrats to everyone who took this trade. I provide the analysis, but conviction and execution are the harder part. You earned this.
Yesterday's PA was particularly lopsided. Various metrics are pointing to extremes. NDX rallied 2.8%, while RUT and DJI gained just 0.5% and 0.7%. Their continued underperformance is consistent with what I outlined in Tactical Positioning: businesses outside AI are being hit hard by the macro backdrop of the Iran war.
SPX rallied at least 1% to within 1% of a new high even as more constituents made new lows than new highs. There were only two previous instances: July 23, 1929, and December 21, 1999. The market peaked 46 days after the first, on September 7, 1929. SPX peaked 94 days after the second, on March 24, 2000. NDX is also showing extremes, with some momentum indicators reaching levels seen only in 1999.
KOSPI did open above 7.1K overnight, as I expected. However, it failed to hold above that level into the close. NVDA, SOXX and KOSPI are the bellwethers of this bull run. Trump has been actively manipulating oil and yields through self-engineered TACOs—including his reversal on Houthi strikes—and trade talks, as I said he would. Given that oil and yields are being actively managed, NVDA, SOXX and KOSPI are now more important to monitor than yields. These precedents are consistent with my view that equities should form a swing high in the coming weeks before sizeable declines in the months that follow.
Tick Tock...
G-Test position Preview position acceptance
SCALE-0924
I've reduced my NQ1! long exposure as SPX approaches the upper channel boundary, taking profits of over 1,000 handles. I still expect NDX and SPX to print new ATHs in the coming weeks, contingent on the conditions I outlined over the weekend, with the positive headlines I anticipated already starting to arrive, including another reported TACO on strikes against the Houthis and today's formal confirmation of Xi's September 23–25 visit to the US. But the rebound has been too sharp, too fast. That is why I'm taking some off.
If SOXX holds this morning's gains into the close, KOSPI will likely open above 7.1K resistance tomorrow. If NDX and SPX go on to print new ATHs, where will that leave SOXX?
My view remains that AI and semis are a bubble waiting to burst. New ATHs in both SOXX and KOSPI would invalidate that view.
560 and 580 are the key resistance levels to watch on SOXX. Around 580 sits the generational trendline that capped SOXX in 2021 and again in May, July and August this year. A sustained break above that trendline would invalidate my thesis of an eventual collapse in semis.
XAGUSD
SOX SOXX
The strength in US equities has been driven by MAG7, while SOXX remains capped by resistance at 533. SOX has followed the dot-com script almost too closely. If it continues to do so, my call for an October top should play out.
Despite my tactical bullishness, my view that the AI and semiconductor trade remains a bubble is unchanged. Even if the major indices print new ATHs, I do not expect SOXX to follow with a new ATH of its own.
USDJPY The BOJ announced a rate increase to 1.25%, effective September 24, yet USDJPY has recovered above 155.56. With the Fed also hiking, Japan's tightening has not been enough to sustain the yen's gains.
The recovery above 155.56 invalidates my tactical short setup. Holding this level keeps a rebound toward 160 and the broken ascending trendline in play.
RUT
Small caps continue to lag SPX and NDX as higher financing costs transmit more directly to smaller companies through shorter-term and floating-rate borrowing, while inflation continues to pressure margins.
BTC1! The CLARITY Act failed to advance in the September 15 Senate procedural vote, but the bill remains alive. BTC has since moved above the descending trendline that capped earlier rebounds. The legislative setback has not prevented the technical breakout.
US spot BTC ETFs took in roughly US$433mn on Friday, recovering the remaining weekly outflows and leaving the week close to flat. Buying returned late in the week, but sustained inflows still need to follow.
HTI1! HSI
The broader liquidity backdrop remains unfavorable. Earlier extreme underweights have already normalized, leaving less room for positioning alone to drive another leg higher. A heavier IPO and share-unlock pipeline adds supply, while a more hawkish Fed compounds the pressure from weak CN domestic demand. Hong Kong's Base Rate rose to 4.25% this week following the Fed's 25bp hike.
DXY The Fed raised rates by 25bp this week, and the dollar finally rebounded. That supports my expectation of limited downside.
601899
KOSPI7.1K remains a critical level for global semis. I expect KOSPI to clear it alongside SOXX breaking above 533 and NQ breaking above its descending trendline. I'll be watching closely if KOSPI and SOXX fail to break out.
Z1! failed to reclaim the ascending trendline it lost last week. The BOE held at 3.75%, but energy-driven inflation keeps further tightening in play. FTSE’s energy and bank exposure offers some cushion, though the failed rebound leaves the bias lower. Reclaiming the trendline would put 10.94K back in focus.
US02Y The Fed finally delivered the 25bp hike. Back in Tactical Positioning | 03.15, I wrote: "If the war drags on, we should continue to see US02Y grind higher, forcing the Fed to hike and dampen growth." This week, the curve flattened with the front end leading. US2Y rose 13bp, US10Y rose 5bp, and US30Y slipped 1bp.
Higher rates can squeeze housing, non-AI manufacturing and hiring without immediately stopping AI investment. They cannot produce oil. The risk remains that tightening hits the rest of the economy before the supply problem is resolved.