MARKET WRAP

Stocks opened higher once again, hitting new all-time highs early in the session, but cracks began to appear, exacerbated by an ORCL story that briefly poured some cold water on the AI rally. Today’s small move lower broke a 7 day SPX win streak. On the day: SPX -0.4%, QQQ -0.6% and IWM -1.1%.

Elsewhere, gold got above 4k following a relentless rally. the US10YY pulled back a tad. Oil edged slightly higher. The VIX was higher again, now 17.25 (its highest close since August, believe it or not.)

Notable Gainers: APP +8%, AMD +4.3%, PYPL +4.1%, ARM +2.7%, NFLX +2.5%, PG +1.5%, KO +1%

Notable Losers: ORCL -2.3%, AMAT -5%, KLAC -4.5%, LRCX -5.6%, STX -7.2%, TSLA -3.5%, NKE -3%, F -5.9%

After hours: The market closed fairly well and SPY and QQQ are both up a tick after hours.

• MRKT Call: Dan and Guy break down the latest in AI’s circular funding loop with updates on AMD, NVDA, ORCL, MU, and STX, discuss the market’s unusually long stretch without a 5% pullback, Gold’s steady rally and hedging strategies, and trends in energy and consumer staples.

• RiskReversal Pod: Guy and Liz compare today’s market to the late 1990s while discussing potential upside, the effects of a possible government shutdown, global market influences including Japan, the importance of technicals in a data vacuum, plus regional bank M&A.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 snaps 7-day winning streak as Oracle slides, shutdown angst grows (CNBC)

• Anxious Investors Push Gold Above $4,000 an Ounce for the First Time (NY Times)

• Dalio Echoes Griffin in Seeing Gold as Safer Than the US Dollar (Bloomberg)

• Gold prices keep rising, and jewelry companies are sounding the alarm (CNBC)

• Billionaire tech investor Orlando Bravo says ‘valuations in AI are at a bubble’ (CNBC)

• Internal Oracle Data Show Financial Challenge of Renting Out Nvidia Chips

   (The Information)

• Tesla prices Model Y standard below $40,000, debuting more affordable vehicle (CNBC)

WHAT’S NEXT?

As we noted yesterday, this market has been driven by a rotation of large-cap stocks benefiting from AI headlines — with AMD serving as yesterday’s standout example. That steady drumbeat of enthusiasm, paired with ongoing speculation in mid- and small-cap story stocks, has been enough to push the market higher day after day. Today, however, the dynamic flipped. ORCL was today’s main character, but this time it dragged markets lower after an internal memo revealed challenges making money on its NVDA chip deals. The move serves as a reminder of the increasingly circular and interdependent nature of the AI and semiconductor trade — a structure that has been powering the indices higher, but one that could also magnify downside when the rally eventually peaks.

That said, today’s action wasn’t ugly by any means, with buyers even stepping in on ORCL. Each recent down day continues to look more like consolidation than the start of something bigger. As highlighted on today’s MRKT Call by Carter Worth, this has been one of the longest stretches on record without a -5% drawdown. It will come eventually — they always do — but small dips that turn higher also set the stage for more FOMO-fueled legs higher. One other note outside of equities, Gold reached a big round number of 4,000. Those types of levels often cause some consolidation due to market dynamics in futures/options. Something to watch for. (MRKT Call featured a hedge in GLD today)

As far as tomorrow, some central banker speeches around the globe, as well as FOMC minutes at 2pm. Although we continue to see a pickup in 30 day implied volatility measures, short duration volatility expectations day to day remain very low, with tomorrow’s about 0.4%:

• Wednesday

  • 2pm - FOMC Minutes

  • Central bankers speak: Lagarde, Logan, Barr, Goolsbee, Musalem, Kashkari

• SPX Expected Move: 0.4%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Is The Gold Rally Over Bought?

Dan and Guy discuss the latest in the AI circular funding, including updates on AMD, NVDA, ORCL, MU and STX. A look at how long it’s been since we had a -5% drawdown, and how that stacks historically (via Worth Charting). A look at Gold’s relentless rally and a way to hedge a long term position. Finally some sector coverage including, energy and consumer staples.

• Analysis - SPX, QQQ, NVDA, AMD, MU, STX, ORCL, Gold, GDX, GLD, XLU, XLP

• Live Robinhood Trade - GLD Collar / put protection

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Watch RiskReversal Podcast’s newest episode: Paul Tudor Jones Warns of Blowoff Rally

Guy Adami and Liz Thomas explore historical market trends, comparing the current market environment to the late 1990s, and debate the potential upside from here. The conversation shifts to potential impacts of a government shutdown, the significance of technical analysis in the absence of economic data, and the influence of international markets. They also examine recent developments in Japan's economy and the potential implications for global markets. The episode concludes with a discussion on regional bank M&A activity and its implications for the broader financial sector.

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