MARKET WRAP

Stocks kicked off the week on a strong note, with the SPX climbing to another all-time high as gains spread from large-cap tech, with AMD today’s massive move, down through small caps—leaving only the Dow in the red. The strength came despite higher treasury yields and a lack of participation from other semi names like NVDA, AVGO etc. On the day: SPX +0.4%, QQQ +0.8% and IWM +0.4%.

Elsewhere, the US10YY crept higher again, now 4.16%. Oil with a little bounce. No stopping gold, with another new high today. The dollar was higher as well. The VIX was slightly lower, now 16.40.

Notable Gainers: AMD +24%, SMCI +5%, TSLA +5.5%, PLTR +3.6%, CRM +2.3%, MSFT +2.3%, BA +1.5%

Notable Losers: APP -14%, SBUX -5%, VZ -5%, MCD -1.6%, BIOG -3.6%, HD -1.5%

After hours: STZ is +3% following earnings.

• MRKT Call: Dan and Guy break down AMD’s surge and Paul Tudor Jones’ call for a potential blowoff top, joined by Carter to analyze chip sector charts, while also discussing ETF concentration risk, Japan’s policy shifts, meme stock momentum, valuation risks, and the rise of circular funding.

• RiskReversal Pod: Dan and Guy discuss the government shutdown, AI investment mania, and market complacency, touching on valuations, Bitcoin and gold trends, and growing concerns about an AI bubble, tech commoditization, and global trade tensions involving Nvidia and Huawei.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 rises to start week, AMD lifts the Nasdaq (CNBC)

• Paul Tudor Jones says ingredients are in place for massive rally before a ‘blow off’ top to bull market (CNBC)

• Record-High Number of S&P 500 Technology Companies Issuing Positive EPS Guidance for Q3 (FactSet)

• AMD Inks Landmark OpenAI Chip Deal That Triggers Explosive Rally (Bloomberg)

• Figma’s stock pops as much as 16% after OpenAI CEO Altman touts ChatGPT integration (CNBC)

• OpenAI Lets ChatGPT Users Connect With Spotify, Zillow In App (Bloomberg)

• Fifth Third to Acquire Comerica in $10.9 Billion Deal (WSJ)

• AppLovin Probed By SEC Over Its Data-Collection Practices (Bloomberg)

• Bitcoin Option Traders Eye $140,000 After Record-Setting Rally (Bloomberg)

WHAT’S NEXT?

A massive gap in AMD led the charge today, even as names like NVDA and AVGO traded lower. That divergence raises the question: is the rally broadening, or are markets simply cycling through the latest AI headline of the day and that’s enough? Evidence increasingly points to the latter, as shown by another example in today’s initial +15% surge in Figma shares following a mere mention of OpenAI integration. This is all quickly echoing the speculative frenzy of the late 1990s.

Paul Tudor Jones posited this morning that such behavior may only accelerate before a true blowoff top. To that point, retail traders have begun chasing out-of-the-money calls in “lotto ticket” fashion more and more over the past few weeks. That tends to exacerbate moves to the upside when they come.

A question was posed by Dan on today’s MRKT Call of how someone even chooses the “next name” to do an AMD type move, knowing it may not make sense, but may be coming. Those seeking more disciplined exposure to these types of moves may find that call spreads—buying near-the-money and selling inflated upper strikes—offer relatively inexpensive setups as volatility skews widen. This could even be done alongside some profit taking as we head into year end, leaving some small exposure to a blow off rip before a top, while also staying disciplined for when a larger dip or reversal does come. We’ll address this more in the coming days and weeks.

As far as tomorrow, very light on the economic data and earnings front, but we do hear from Fed members, something that will take on added significance as a lot of official data remains quiet due to the shutdown.

• Tuesday, October 7th

  • Fed Speak: Bostic, Bailey, Bowman, Miran

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Carter Worth: This Is The Sector Where Alpha Goes To Die

Dan and Guy discuss AMD’s big move and Paul Tudor Jones’ call for a potential parabolic rally leading to a late-’90s-style blowoff top. Carter joins to break down AMD’s breakout and compare SOXX performance to the SPX and Tech historically. The conversation also covers concentration risk in poorly constructed ETFs, Japan’s policy shifts and their global implications, a roundup of quantum and other meme names, valuation risks, and the rise of vendor financing and circular funding.

• Analysis - SPX, AMD, ORCL, SOXX, SPX, SMH, XLY, KRE, DXY, USDJPY, BTC, GLD, GEMI, CRWV, MSTR, RGTI, QUBT

• Your Questions

  • Donald Clayton - could policy changes enacted by the new Japanese leadership create a problem in global markets?

Learn more about our sponsor, MoneyLion.

Watch RiskReversal Podcast’s newest episode: The Complacency Trap: Could October Wreck Your Portfolio?

Dan and Guy discuss the government shutdown, the latest AI investment headlines, market complacency, current valuations, the recent performance of Bitcoin, gold, and their implications on the broader financial landscape. Additionally, they touch on concerns around the AI investment bubble, technological commoditization, and global trade tensions, specifically regarding Nvidia and Huawei's AI developments.

Learn more about our sponsor CME Group, iConnections, and SoFi.

A MESSAGE FROM OUR PARTNER

Subscribe to the RiskReversal YouTube Channel and drop a comment/like to show your support

Want to check out past podcast episodes? Go to wherever you get your podcasts and type in “RiskReversal Media”

We want to hear your feedback! Reply to this email with any comments or questions