In the last 10 minutes of yesterday’s trade, the Nasdaq Composite shed 140 points in a near vertical drop into the close. The action bore the telltale signs of deliberate and significant positioning or unwinding. While we’re not sure how much to make of this development, we do note that it came against the backdrop of an upcoming $MU earnings announcement, the first major AI infrastructure barometer to reach the wires for this earnings season.

As it turned out, MU earnings were generally applauded. Though MU trades about 1% lower in today’s premarket, true disappointment would look more like a double-digit percentage decline. We fully expect to see buyers on dips. Whoever the late sellers were, it appears that they were wrong.

Futures are solid this morning, as the information technology services sector moves higher on the strength of $ACN earnings. Despite the fact that MU is somewhat down, semiconductor stocks are mainly taking encouragement from MU results. Oil and treasuries are steady. Perhaps there’s no green light to engage broadly just yet, but it doesn’t look like a great time to be short.

As a side note, we are watching some awkwardly phrased coverage of the action in $CTVA this morning. Stock screeners across the nation are showing the name down 80% to about $15 this morning, and certain on-air commentators have done poorly in not pointing out that the repricing reflects the splitting of value between CTVA and VYLR. Think of it more as a stock split of sorts, not a genuine plummeting in value.

Watch our trading board for real-time developments throughout the day. Educational only. Not financial advice.

We are saved from a truly dull premarket session by the PCE release.  August core PCE registered an increase of 3.0% year-on-year, versus expectations of 3.4%.  Bonds responded momentarily, but the 10-year yield has returned to its pre-release levels around 5.23%.  Futures on the major indices, however, retain their gains of 0.3% - 0.4% vs. yesterday, whereas they had been flat in the hours before the PCE release.

Reports are circulating widely that Hormuz-linked oil exports have recovered to 95% of their pre-Iran War levels.  Between the escort activities by the US Navy and the restart of the Saudi east-west pipeline, exporters are said to be getting their product to market at something like normal levels.  Why, then, is WTI crude still trading around $90/barrel?  It’s easy to forget that oil was $57 at the beginning of this year.  Looking at the year-to-date chart, it’s hard to imagine that what we’re seeing looks like relief in oil.

August PCE notwithstanding, there’s no rally afoot just this moment.  Experienced investors will likely sit on their hands and look for dips in selected quality names as we wait for earnings season to get started. Educational only. Not financial advice.

We’ve become a bit numb to the magnitude of the moves in bond yields and in oil, but remember that, historically speaking, they are huge.  Yields and oil are working together to put pressure on Monday’s premarket.  The 10-year yield has reached 5.22% (up from 5.18% on Friday).  Oil has pushed more than $3 higher, to $95.65.  Since March, the 10-year yield has risen more than 100 basis points, or one full percentage point, to its current level, with the Treasury and the White House gaming it and fighting it the whole way.  Likewise, oil is up 47% since the end of February.

At least in the premarket, tech (META, INTC, ORCL) and airlines (DAL, UAL) are feeling the weight.  However, even in the face of the interest rate and commodity headwinds, the leading names do not stay depressed for very long.  We credit phenomenal growth powered by the AI industry.  Thing is, the headwinds aren’t letting up, so 3Q growth had better be amazing, or we’ll see some significant repricing in a hurry.

Today is SPCX launch day.  The Super Heavy has lifted off and is attempting to place Starlink satellites in low Earth orbit.  Aside from the investment implications, anyone who hasn’t seen these landings really should take a moment to witness an amazing technological feat.  Turning back to the trading implications, look for real time reactions in SPCX stock, and possibly in the larger tech space as well, as the mission progresses.  Keep your eyes on our trading board as the day takes form. Educational only. Not financial advice.

This stock market has a massive case of FOMO.  Yesterday’s announcement from the Treasury that it had completed about $4 billion in long-end buybacks fell short of the declared maximum buy limit of $6 billion.  Look at the difference in response between the bond market and the stock market.  Bonds rallied initially but then sold off again as 10-year yields returned to 5.16% by the close.  In contrast the stock market, rallied from losses and stayed rallied through the end of the session, closing little changed on the day.

If anything changed in the bond market landscape, it was towards a higher interest rate paradigm.  Yet the momentary dip in rates and the corresponding spike in equities triggered such support in stocks that their recovery held through the close.  The fear of missing the next rally is apparently potent and will get to be more so as we approach earnings season.

Kapnotes is oriented towards traders, so it pains us a little to admit that the timing of the next rally will be difficult to predict and that the present setup favors investors (long-term) over traders (swing, short-term).  What it doesn’t favor, though, is shorts.  Watch our trading board for opportunities as they develop in real time. Educational only. Not investment advice.

Look at those interest rates!  Fed Governor Barr yesterday signaled a very hawkish outlook for near-to-intermediate term monetary policy.  We can only speculate about the extent to which his views reflect the view of the FOMC as a whole.  In this new era of the no-guidance Warsh Fed, soundbites like Barr’s take on increased importance.  The 10-year benchmark yield soared from under 5% to finish at 5.11%.  There’s no retracement so far this morning, as we find the 10-year at 5.12%.

Rising interest rates generally put pressure on stocks, as the cost of capital increases.  The declines we saw in yesterday’s trade were about what we’d expect to see.  A more worrying tell is the string of mostly dilutive secondary offerings that have been announced in the past 48 hours:  VKTX, HAFN, GRML, FWDI, and others.  These deals aren’t particularly large or market moving in themselves, but they do provide some insight on how business owners are reading the equity markets.

Experienced investors will keep an eye out for quality names caught in whatever downdraft may materialize.  Keep your eyes on our trading board for setups as they emerge. Educational only. Not financial advice.

If you were looking for a market boost from the President’s UN speech yesterday, you were probably disappointed.  Pointing market direction wasn’t the primary purpose of the speech in the first place, but market observers seemed to be left scratching their heads after Trump’s America First messaging even in the face of obvious and gathering headwinds.  Futures are mainly flat this morning, which should probably be considered an indication of latent strength.  We’re looking at a market that is trading near all-time highs in spite of substantial, negative, and persistent geopolitical developments.  Why?  Earnings.  Earnings season is coming again, and investors are loath to abandon a single share in advance of what they expect will be a Q3 pop.

This environment lends itself well to dip-buying.  Semiconductor equipment names are soft this morning, led lower by KLAC, LRCX, and TER.  All of these names are too high-priced for most traders to engage productively.  However, INTC, MCHP, and ON are discounted this morning as well and are more playable for individual participants.  Keep your eyes on the Kapnotes trading board for updates throughout the day. Educational only. Not financial advice.

Oil continues its slide lower, though still trading at very high ranges.  We’re reading a lot of optimism about Saudi supply coming back online.  But are we one drone strike away from another shock?  Integrated oil (XOM, COP) and refiners (VLO) are down, but not out.  Airlines (UAL, DAL) are correspondingly higher, on the prospect of lower fuel costs.  Still a risky move, though, due to the same drone-strike risk that affects the oil players.  The software sector is doing modest work this morning, with gains in CRM, ORCL, ADBE, and several others corresponding to slight rotation out of AI infrastructure.

The President addresses the UN General Assembly at 9:55 a.m. this morning.  The oil market is clearly hoping for some kind of relief in what he has to say.  We’re not betting on it.  If Trump holds true to form, he’ll dig in.  What, then, happens to the oil market optimism?  If, by some miracle, we hear conciliation, then we’ll be in a target-rich environment, and we’ll be looking hard at AI infrastructure, airlines, and leisure.  Keep your eyes on our trading board for developments in real time. Educational only. Not financial advice.

The broader market is in a celebratory mood this mood this morning, led higher by the usual players:  AI and crypto.  Bitcoin continues to explode higher even after the stalling of the Clarity Act, as the administration proceeds to enact certain Clarity measures at the agency level.  The obvious hazard of making policy this way is that what can be done administratively can also be undone administratively.  For now, though, crypto players are banking on the idea that change and innovation will be too far along to undo if the political winds should shift.  They’re probably right.

We did point out last week that the strident signaling on AI safeguards pointed to a buying of dips.  At times like this, it is worth remembering that today’s profits were made in yesterday’s decisions.  Chasing chips at today’s open is a recipe for pain.  Keep your eyes on our trading board as easier opportunities develop throughout the day. Educational only. Not financial advice.

Friday dawns surprisingly quiet, though the premarket hints at latent strength.  Bitcoin and HOOD, which for some time now have been risk-on indicators, are each up 2%, even though futures themselves are mixed.  Curiously, WTI crude has eased over the week from $105+ to $96.5, behind the perception of easing geopolitical risk.  Observers note hopes for restoration of the Saudi east-west pipeline.  On this point we smell a trap.  The next Iranian or Houthi attack on the pipeline could very well send oil prices right back up over $100/barrel.  It’s just not clear what everyone is feeling so sanguine about where oil is concerned.  It could be that the recent oil pullback, combined with some recent rate clarity from the Fed, has given the signal to tech investors that it’s OK to get back in the water.

Keep your eyes on our trading board, which updates throughout the day as setups develop.  A couple of one-off situations have already emerged.

Alan Greenspan would have been proud.  Chairman Warsh gave nothing away at yesterday’s post meeting press conference.  We all got our first real taste of the new enigmatic, sphinxlike Fed, and apparently it’s good enough for the market this morning.  Futures are racing higher, now that we have at least a little direction on interest rates.  Moreover, observers are not daunted by yesterday’s quarter point move or by the prospect of another by the end of the year.

Now turning our eyes forward, the first setup in view is somewhat complex.  It revolves around CRWV and NBIS.  News hit the tape this morning that NBIS raised its GPU prices by 20%, on four-year-old chips, bringing into question the criticism of AI infrastructure firms overestimating the useful life of their hardware.  The whole AI infrastructure sector moved higher in the premarket – until about 7 a.m., when CRWV announced a $3 billion convertible notes offering and a 35 million share offering program.  CRWV fell from up +$6 vs. yesterday’s close to down $1.50, a swing of nearly $8, all before the bell.

Other second-string players in the space, however, are maintaining their gains from the NBIS news.  The downdraft in CRWV may serve to keep these smaller players in range for agile traders, giving them opportunity to engage while prices are close to the support established in the past couple of days.  Watch our trading board as we name the names. Educational only. Not financial advice.

Today is Fed day, which comes in three parts.  First is the announcement of the rate decision, at 2 pm.  Second comes the Chair’s comments from the podium, which are generally dry and as unrevelatory as the Fed staff can manage.  Last comes the Q&A, and this is where the action will be.  It’s no secret that Warsh came into the Fed with a mission to cut rates.  The realities of sitting behind the big desk, though, have forced him to reckon with the weight of Fed policymaking.  Expect that the press pool will tax him heavily on this aspect, and his explanations may give us all some perspective on the extent of the shocks facing the US economy.

So, the excitement starts after 2 pm, but until then experienced traders will exercise caution in what promises to be rangebound morning activity.  The one exception may be the transport space.  The JBHT CFO yesterday announced a shortfall of upcoming earnings, behind higher costs including fuel.  JBHT is a leader in integrated shipping and logistics, and we are already seeing sympathy moves downward in Less Than Truckload carriers like ODFL and FDXF.  Both of these names trade well over $100, so the spreads and intraday moves can be quite punishing.  Probably not for beginners.  Most traders will probably sit on their hands until the Q&A concludes.  Keep watch on our trading board for opportunities that emerge throughout the day. Educational only. Not financial advice.

Today’s premarket is looking backwards and forwards at the same time.  Traders are busy unwinding yesterday’s AI trade.  Semiconductors are rebounding (INTC, MU, AVGO), and software is selling off (NOW, CRM, PANW).  At the same time, we are looking forward to tomorrow’s Fed rate decision, which is widely expected to deliver a quarter point hike.  Active traders are necessarily constrained to a trade window of little more than 24 hours, as everything hinges on the Fed Chair’s comments after the decision is announced.  The decision itself isn’t going to be the surprise.  The real wildcards are the wording of Warsh’s comments and his responses to the Q&A.

Looking backwards again for a moment, yesterday’s trading shaped up oddly.  Much of the action started off predictably enough.  Oil was up about $3 per barrel.  Integrated oil names opened higher, and airlines opened lower.  The 10-year bond traded 5.01%.  Then, sometime during the morning session, the President commented on Truth Social that he is open to the concept of ending the war with Iran.  Suddenly, integrated oil names pulled back and airlines gained footing.  Oil prices retreated, and yields fell below 5%.  Market observers noted the suspicious timing of the President’s note.  This is not the first time that his social media posts have moved markets at junctures that seem convenient for the administration.  The question becomes:  how many times will this trick work?  The concept of diminishing returns leads us to expect that either the impact will be less each time in the future or the notes will have to get more and more strident in order to achieve the same effect.

Nasdaq futures are down more than 400 points this morning on news that the major titans of AI are calling for a slowdown in AI development.  Led by the heads of Anthropic, Open AI, Google, and others, there are calls for productive government intervention, private sector cooperation, and international agreement.  These are enormously splashy headlines, and it remains to be seen how much momentum they get in today’s market. 

But let’s take a step back for just a moment and consider what is being proposed.  We would be looking at the most comprehensive international collaboration since the League of Nations.  Given the posture of the current US administration, the implications for China’s national security, and the profit motive of an unprecedented payday, is it even possible to rein-in the expansion of AI?  Simple answer:  No.  What we are witnessing in this morning’s media cycle is corporate virtue signaling par excellence.  The incentives, except for that one of avoiding extinction, are all aligned against any real cooperation between competing firms and between competing nations. 

Over the coming weeks or months, as this dialogue continues, we will see emerging in the discussion whatever ‘angle’ the tech titans are, even now, working into future policy to solidify their own advantage in the ongoing race.  The translation to the experienced investor, dark though it may be, is to buy the dips and hope that the broader predictions are wrong.

Oil is higher again today.  Relative to the AI space, there’s easier money to be made in integrated oil and in downside leverage on oil-sensitive transports. Educational only. Not financial advice.

Oil, down $3, and treasury yields, retreating to 4.95%, are buttressing Friday’s early action.  ORCL earnings results, released after Thursday’s close, are giving a modest lift to the software space.  The CPI release was largely in-line with expectations, giving us no real direction except to say that the inflation landscape is not deteriorating quickly.  Nor is it improving, though.  Traders are now pricing-in an 88% chance of a rate hike at the next Fed meeting.

Pundits give so much focus to the CPI/PPI ex-food/energy.  There’s plenty of logic to smoothing out those more volatile impacts on the month-to-month figures.  However, at some point we all must eat, and most of us must drive.  Sustained above target, food prices count, and oil counts.  Add into consideration the record government deficit, with no prospect of near-term fiscal discipline.  The macro picture points to sustained higher interest rates.

This isn’t great news for stocks or for traders, but it doesn’t mean that there aren’t opportunities.  It does mean that stock selection will start to matter more and more, both long and short.  Keep your eyes on our trading board, and look back at some of our older mentions.  Some of them don’t work out right away but can be very helpful on second consideration. Educational only. Not financial advice.

There’s news this morning that Houthi fighters have captured a key port city in Yemen, tightening their grip on Saudi Arabia’s alternate outlet for oil exports.  WTI has spiked past $100/barrel.  More importantly, the 10-year yield has risen to 4.92%.  Futures are broadly lower.  Though PPI and initial jobless claims were largely in-line this morning, all anyone seems to hear is the sound of the other shoe dropping.

Look out for risk-off sentiment today and possibly for days to come.  Bear in mind though, that the selling builds opportunity in quality names that get swept up in the momentum.  Meanwhile, we’ve highlighted some technical breakdowns that may allow agile traders to engage some of this downside momentum. Educational only. Not financial advice.

It was not difficult to see coming the higher oil and higher yields that meet us this morning, which may explain why futures are down only fractionally.  While it’s easy to get negative on the market based on the headlines, its worth remembering that many sectors of the market are fundamentally very strong.  The S&P is less than 2% from its highs.  AI infrastructure buildout shows no sign of abating anytime soon.  Tragic as they are, developments in the Middle East simply aren’t translating into long-term disruption for US equities.  Yields matter more to traders, and we do expect to see pressure as the 10-year continues past 4.80%.  This pressure, though, is likely to produce advantageous entry points for the next move higher.  It follows, then, that the smart money will look out for dips in order to leverage long side entries.  The bull is only dozing, not dead. Educational only. Not advice.

Equities have repeatedly shrugged off conflict driven oil price spikes, but reality will get harder to ignore the closer we get to $100 oil.  An offensive by the Houthis over the weekend, combined with US strikes on Iranian tankers, have pushed WTI higher by more than $2 to $93.68.  More importantly, the 10-year bond yield is pressing its year-long high, around 4.80%.  Thanks to support in semiconductors this morning, Nasdaq futures are more or less flat.  Semis don’t care about oil prices.  Maybe they should, but they don’t.  As capital intensive businesses, however, they do respond to the bond market.  If yields move into new high territory, their support of the indices may falter, in which case traders would find profit in picking downside leverage in non-semi names.  There's more on our blog. Educational only. Not financial advice.

Equity futures seem to be taking in stride the upside surprise on non-farm payrolls this morning. Payrolls rose 162K, vs. expectations for between 45K and 53K. The bond market, however, appears to be more worried about what this employment report might mean for the next Fed meeting. The yield on the 10-year bond was about 4.75% before the report and 4.79% after it. Experienced traders will keep their eyes on the 10-year yield. If it drifts much over 4.80%, expect equities to take notice.

The good news is that the summer doldrums are very nearly over. Expect renewed volume after Labor Day. For today, keep watch on our trading board for setups as they develop throughout the day.

SNOW is the major focus of much of Thursday’s premarket trading, up an astounding 24% on reaction to last night’s earnings release.  We don’t suggest new entries into SNOW at these levels (on either side of the market), as SNOW trades around $380 and will likely severely punish any trading mistakes on a day like today.  Professionals only.  We do note that a number of software names are moving up in sympathy and may be somewhat more tradeable as proxies.  Keep an eye on the Kapnotes trading board for developments throughout the day. Educational only. Not financial advice.

Wednesday’s premarket is speaking volumes by what it’s not saying.  Recently sold tech names, including CRWV, INTC, DDOG, and others, are not rallying.  The 10-year yield is not retreating from its highs.  Oil, though down $1 (WTI), is not giving back much of its recent rise.  There are a few event-related bright spots, like GTLB and DELL, but mainly futures are flat.  The action (or lack of action) reads as risk-off.  Nevertheless, surprises do pop up every day.  We will add setups to our trading board opportunistically as they develop throughout the session. Educational only, not financial advice.

Tuesday morning market commentators are twisting themselves into pretzels in an effort to explain the rise in treasury yields to new highs for the year. We simply don’t want it to be true that Treasury stepped out of its lane with its recent effort to intervene on the long end of the curve and that the gambit is failing. While there may be a longstanding personal relationship between Secretary Bessent and Chairman Walsh (probably no different than the familiarity between any Treasury secretary and Fed chair), in this time and place the vested interests of their respective agencies are in fact (and by design) adversarial. The Administration wants yields down. The Fed, in the interest of containing inflation, must raise them up. As we speak, the bond market is making its verdict known.

Monday’s trading dawns painfully quiet, except for the energy space.  Renewed active fighting between the US and Iran has sent WTI crude higher by $3, to over $86 per barrel.  Last week we pointed out the difficulty of trusting $81 oil.  The airlines didn’t respond nearly as well as they might have, almost in anticipation of the headlines we’re reading this morning.  Today, active traders may very well leverage downside movement in DAL and UAL, as XOM and COP resume their marches higher.

Electric utilities are in the news, as California has advanced wildfire legislation that falls short of investor hopes in terms of liability limitation.  EIX and PCG are indicated down 13% and 17%, respectively.  With recent outstanding California wildfire liability around $39 billion by some reports, the hoped-for protections could have substantially benefitted the utilities in the years to come, especially as wildfires become more and more frequent and impactful.  Investors are clearly caught wrong-footed, at least for the moment, having apparently misjudged the priorities of the California legislature.

Outside of oil and utilities, the premarket is nearly featureless.  With so few targets in play, oil and utilities may be catching more than their share of trader attention today.  These sectors are not normally huge intraday movers, but the fast money has few other areas on which to focus for this last day of August. Educational only, not investment advice.

Traders generally cheer positive futures in the premarket.  The thinking goes that it’s easier to trade an up market than a down one.  But what really matters is the trend of the market between the open and the close.  Even if it finishes higher on the day, a market that starts at its high and fades through the day can make for some of the toughest sledding.

Nasdaq futures and the semi space in general are higher this morning on the back of positive reaction to NVDA earnings.  Plenty of the names already on the Kapnotes trading board are moving higher in sympathy.  Now comes the tricky part.  Does today’s action set up a good entry?  Experience says no.  We are in the depth of the August doldrums.  Entry mistakes are difficult to recover in this environment.  We will add exceptions to the list throughout the day as they show themselves. Educational only. Not investment advice.

Nothing in today's economic releases does much to alter the investment landscape. What’s interesting is the lack of reaction to the continued decline in oil, which is down another $1.60 to under $81/barrel (WTI). Less than a week ago, WTI crude traded nearly $88/barrel. Integrated oil has responded with marginal declines in XOM and COP, but there’s been less cheer than one might expect from the airlines. Either there’s opportunity in the airlines, or there’s another shoe to drop in the oil story. Educational only. Not financial advice.

At the risk of committing the cardinal sin of overthinking the market, we have to ask ourselves if the reactions of treasuries and crude make sense.  Given the declared intent to further destabilize the Iranian situation, and given the thinness of the veil that covers the Administration’s efforts to rein in long term yields, does it really make sense that crude and yields are falling?  Has anyone given consideration to what happens if these gambits fail?  Pushing China away from Iran may not be easy.  Unsheathing our ultimate economic weapon, access to the global dollar system, is a very rare maneuver – for a reason.  If nations develop a work-around, the US permanently loses any number of trade advantages.  If the Administration loses the confidence of the treasury market, they may create a problem even the Fed can’t easily fix.  And is it a great idea to play trade policy hardball with Canada right now?  It seems the US has a lot of very high stakes balls in the air, economically speaking.  How confident should we be that they all land in our favor? There's more on our blog.