MARKET WRAP

Stocks opened flat to slightly higher but drifted lower throughout the session, with NVDA and the other Mag7s all lower on the day. Small caps also reversed from new intraday all time highs this morning. On the day, SPX -0.6%, QQQ -0.7%, and IWM -0.2%.

Elsewhere, implied volatility has picked up a bit the first two days of this week despite the SPX being essentially unchanged from Friday’s close. This VIX was back above 17 mid day before closing 16.60. the US10YY was down a tad, now 4.11%. DXY was fairly quiet, now $97.25. Gold was slightly higher, as was Oil.

Notable Gainers: BKR +3.3%, CSX +2.5%, INTC +2.3%, GILD +2.3%, PLTR +1.8%, TSM +3.6%

Notable Losers: AMZN -3.3%, NVDA -2.9%, CRM -2.1%, V -1.8%, MSFT -1.2%, META -1.3%

After hours: MU briefly spiked to $175 after its earnings report, but has pulled back, now just slightly higher from its close around $168

• MRKT Call: Dan and Guy on the state of the AI trade momentum, NVDA’s and PE’s role in AI capital, NVDA’s potentially soaking up investor dollars at the expense of other Mag7 names, the Russell 2k’s test of multi-year highs, plus trades in ORCL and IWM.

• RiskReversal Pod: Guy and Liz on semiconductors, Apple, the fluctuating bond market, gold, equity valuations, holding positions rather than chasing the rally, the bond market's reaction to the Fed rate cut, construction employment's downturn, and whether that signals broader economic shifts.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 pulls back from record as AI trade in Nvidia fizzles, Powell hints stocks are overvalued (CNBC)

• Powell says slowing labor market prompted rate cut, sees ‘challenging situation’ ahead (CNBC)

• Tariffs to Hit Slowing U.S. Economy Hard in 2026, OECD Says (WSJ)

• US High-Grade Bond Market Is Having Its Busiest September Ever (Bloomberg)

• OpenAI and Oracle to Announce Data Center Expansion in Texas (The Information)

• Disney Is Raising Streaming Prices to as Much as $19 a Month (Bloomberg)

WHAT’S NEXT?

Fed Chair Powell added some color to today’s action when he called equities “fairly highly valued” during remarks mid-day. That’s not exactly Greenspan-level “irrational exuberance” fame, but on the heels of some recent moves like ORCL’s, it was yet another moment that felt a little dotcom-era-y. It’s worth remembering with “irrational exuberance”, that the dotcom bubble inflated much further over the next few years, with the SPX doubling from Greenspan’s remarks before its eventual peak.

Back to the present, implied volatility rose for a second straight day, catching a bid both yesterday on a rally, and today on a decline. The VIX closed today near 17, up from about 15.50 last week, despite the SPX being in essentially the same spot as Friday’s close. As a reminder, a “vol up /stocks up” dynamic often reflects euphoric undercurrents and it’s something to keep an eye on. We are already seeing signs of highly speculative trader behavior in mid- and small-cap names, and seeing upside call skews steepen. That’s a telltale sign of retail speculation/FOMO increasing even as stocks make new highs. If that continues, it likely fuels further squeezes higher in speculative names and sectors short term—before potentially injecting some overall volatility higher and lower into what has otherwise been a smooth, low vol rally (at the index level) of late.

For tomorrow we get some housing focus with New Home Sales and KB Homes reporting. A fairly quiet day overall. That leads us into the end of the week where things pick up a bit with GDP, PCE and more. SPX options are pricing in about a 0.9% expected move into Friday’s close with Friday the “highest” IV at around 12.

• Wednesday, Sept 23rd

  • 10am: New Home Sales (0.65m)

  • 4pm: Fed Daly Speech

  • After-hours: KBH 5%

TODAY’S EPISODES

MRKT Call’s latest episode: Is It Breakout Or Breakdown Time For The Russell 2000?

Dan and Guy on the AI trade momentum, NVDA’s recent moves, and the massive capital flowing into the space from major players, including private equity. They also ask whether NVDA is drawing money away from other Mag7 names like GOOGL and MSFT. They also take a look at the Russell 2000 at multi-year highs (and past points of failure) and whether we see a breakout or a pullback from here.

• Analysis - SPX, IWM, NVDA, ORCL, GLD, SLV, PG, KVUE, MU

• Robinhood live trade: ORCL bearish butterfly, IWM put spread.

• FactSet / John Butters Earnings Report: An SPX target based on a bottom analysts price target on the components, plus a breakdown by sector. 

• Earnings Preview - MU

• Your Questions:

  • Clark Kemp - Is it finally time to short IONQ?

  • Ziad Khalaf - What do you do with Gold and especially Silver, they just keep going up?

Learn more about our sponsor, Robinhood.

Watch RiskReversal Podcast’s latest episode: The Hidden Warning Signs in Today’s Market Run-Up

Guy and Liz on semiconductors, Apple, the fluctuating bond market, gold, equity valuations, holding positions rather than chasing the rally, the bond market's reaction to the Fed rate cut, construction employment's downturn, and whether that signals broader economic shifts.

Learn more about our sponsor Robinhood.

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