MARKET WRAP

You wouldn’t know it from the closing prices, but once again, we saw intense intraday volatility. With small caps leading things early with another breakout to new highs and the SPX sniffing a near full recovery of Friday’s sell-off. But sellers emerged after the first hour of trading and took the SPX down to at one point -0.5% on the day. But, buyers stepped in from there and we finsished green, although off the morning highs. On the day: SPX +0.4%, QQQ +0.7% and IWM +1%.

Elsewhere, the US10YY put in a print just below 4% early morning before finishing more or less unchanged on the day, now 4.04%. Gold, new high, again. There seems to be very little news that has a negative affect on gold at the moment, but the price action is very stretched short term. Oil was fairly quiet. The dollar was slightly lower, as was BTC. The VIX closed 20.64.

Notable Gainers: BG +12.6%, FSLR +9.3% , AMD +9%, WDC +6%, MRNA +5.7%, INTC +4.5%, MS +4.4%, NKE +1.3%

Notable Losers: PNC -3.9%, HON -3%, PGR -6%, PG -1.2%, CRM -1.5%, MELI -3.5%

After hours: UAL is more or less unched after its report, JBHT is up +11%. SPY and QQQ both up a tick after hours.

• MRKT Call: Guy and Dan are joined by Chris Verrone to break down the recent market volatility, the shakeout in positioning, and whether small caps are emerging as new leaders. They also discuss Q4 seasonality, gold and dollar setups, and where yields might be headed next.

MRKT MATRIX: TODAY’S TOP STORIES

• Wall Street Banks Notch $15 Billion Trading Haul on Stock Rally (Bloomberg)

• The Nation’s Biggest Banks Are Saying the Economy Is Still Strong (WSJ)

• Treasury Secretary Bessent says a stock market decline won’t deter the U.S. from taking strong action against China (CNBC)

• Fed’s Miran sees China trade tensions as a further reason for quick interest rate cuts (CNBC)

• Tariffs are pushing prices higher and consumers are feeling the hit, Fed’s Beige Book shows (CNBC)

• Tesla demand in focus after Trump policies lead GM, Ford to retreat from EV ambitions(CNBC)

WHAT’S NEXT?

If you’re keeping score of the recent intraday volatility, Friday saw about a 3.2% range between the highs and lows, yesterday nearly 2%, and today about the same. The sudden rush for near term protection, the expansion in short-dated implied volatility (and the VIX), all in the middle of a tariff news cycle and earnings season, has jolted everyone awake — and established large intraday swings and morning gaps as the norm for now.

At one point today, market leader NVDA was down -10% from its all-time highs made just days ago (on Friday morning). There’s a lot going on under the surface, and we’re in a tape where traders can get turned around very quickly. How long this lasts probably depends on the tariff news cycle, but there were signs today that the market’s already getting a little numb to it, shrugging off some negative comments from Bessent earlier in the day.

The new day to day volatility aside, mega-cap earnings is what’s likely to decide the next leg. Small caps have shown “leadership” lately while some of the megacaps have cooled — if those megas catch a bid into or out of earnings, the market could hit escape velocity/mania. If not, and they head lower from here, the rest of the market likely does as well, and suddenly there are a lot of retail traders sitting on leveraged bets that could unwind fast.

For tomorrow, we were supposed to get PPI and Retail sales but not with the government shutdown. We may be nearing a point where this lack of data starts to have an effect on the market. In its place tomorrow, more Fed Speak, and some interesting earnings including Taiwan Semi which will hit in the middle of the night US time, while Schwab and Interactive Brokers will give is a sense of retail trading over the past quarter.

• Thursday, October 16th

  • Fed Speak: Bowman, Kashkari, Barr, Miran, Waller

  • 8:30am - Philly Manufacturing (10)

  • Pre-market: TSM 5%, INFY 5.7%, SCHW 4.6%

  • After-hours: IBKR 5.6%, CSX 3.6%

The SPX expected move is once again 0.75%, same as today.

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Macro Chart Check: S&P 500, Gold, The Dollar & Crude with Chris Verrone

Guy and Dan welcome Chris Verrone to discuss the recent volatility and positioning shakeout, noting that IWM emerged as the relative winner — and whether that signals a potential leadership shift. They debate if the recent flush was enough to shake out weak hands, when Q4 seasonality might kick in, and how this bounce from the April lows compares to the late ’90s. The conversation also touches on whether gold (GLD) is due for a pullback, if the dollar (DXY) is nearing a bounce, and where yields could head next.

Analysis - S&P e-minis, IWM, GLD, SLV, US10YY, Crude, CEG, AMD, MSFT, NVDA, BAC

FactSet/Butters Weekly Earnings Report - Mag7 stocks into earnings, what’s expected and market concentration. 

Learn more about our sponsor, CME Group.

Learn more about our sponsor Betterment, Current, and RBC Capital Markets.

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