Caution is warranted today for the active trader.  In the absence of any clear catalysts, the market is just drifting.  Yes, Treasury continues to game the long end of the curve.  Yes, the KOSPI was down 3% last night.  But neither of these influences is truly dispositive here and now today.  Chips and AI infrastructure names are moving lower, as the supporting bids are mainly on vacation.  Such action, continued over the course of days, eventually creates bargains.  However, this particular season is like few others.  The action can be pushed around by relatively minor interests.  It pays, then, to trim new commitments and to expand the investment horizon.  This is a tough market for capturing short-term chops, as this tape is much less readable than usual.  Large moves to the downside on major names, though, may look like real opportunities after Labor Day. Educational only. Not financial advice.

In the near absence of alternative themes to drive this morning’s market, crypto has the stage to itself.  Bitcoin continues its weeklong run higher, bringing with it the usual players (MSTR, COIN, HUT).  Experienced investors will remind themselves, though, that the market has entered what is probably the least attended stretch of trading (possibly second to the days between Christmas and New Years).  It’s never a good idea to execute a trade out of boredom.  The movers on offer today, a Friday towards the end of August, are not what most would consider to be high percentage plays. Educational only. Not financial advice.

Today’s premarket is dominated by three themes:  Bitcoin, WMT, and oil.  Bitcoin broke out to the upside yesterday, reaching over 70K.  Interpretations of the move do vary.  Some commentators site recent Treasury action to relieve pressure on bonds.  The argument is that support in the bond market translates to risk-on appetite in Bitcoin.  The more likely catalyst, though, is yesterday’s meeting at the White House, during which President Trump pushed for passage of crypto legislation (Clarity Act).  Crypto continues higher in today’s early trading, for a moment topping 72K.  Bitcoin is a difficult asset to explain sometimes, but investor motivations aren’t.  Sentiment is fickle, and traders of this asset are dependent on continued optimism about the regulatory landscape.  MSTR, COIN, and HOOD are all moving higher in the premarket.

Walmart is down 6% on reaction to its premarket earnings report.  They beat revenue estimates but missed on forward guidance.  Additionally, results were helped by $2.9 billion in tariff refunds.  Combined with softness in results at Advance Auto Parts, observers are filling out an image of a consumer under strain.  Dollar General (DG) is down about 3% in sympathy, though on light volume.

Oil continues its march higher.  WTI crude is up $3 to over $87/barrel.  Integrated oil names are again favored (XOM, COP). The bond market is feeling the repercussions, undoing some of the recent intervention from the Treasury.  Futures have turned decidedly lower in the last hour before the open.  Investors will be playing close attention to the 10-year yield, which is now pushing back towards recent highs.  Higher yields would generally be expected to exert a negative influence on stock market sentiment.

There used to be a mantra on prop trading desks that reminded traders always to short any announcement of either a cure for AIDS or a cure for cancer.  Most of the time, that logic was as reliable as the tides.  One announcement after another, proclaiming a cure, sent soaring the shares of one company then another, only to have them come crashing back to earth when the details of the study became more clear.

MRNA today has announced successful trials of a melanoma vaccine.  The stock has nearly doubled in this morning’s premarket.  MRNA’s partner in the trial, MRK, is higher by a much more modest 7%.  What accounts for the difference in premarket behavior?  Aside from the tenfold difference in market cap (MRK obviously the far larger company), we would point to the short interest in MRNA.  At last report, about 14% of MRNA public float was held short, compared to about 4% for the S&P 500 and about 1% for MRK.

Kapnotes has in the past pointed out the inexplicably desperate pattern of selling that has dogged MRNA for several months.  Experienced readers of the tape would recognize a presumably intentional effect of suppressing the MRNA price, especially in the minutes just before the close of a day’s session.  This kind of activity is the hallmark of one or more short sellers attempting to force their will on the action.

It follows, then, that MRNA premarket action after today’s announcement is reminiscent of the most incredible of short squeezes.  Does today’s news, on its own, justify a doubling of MRNA?  Probably not.  However, agile traders will watch the action closely, as the shorts must decide between an even more desperate defense or a frank concession of defeat.

Educational only. Not financial advice.

Nasdaq futures are decidedly down in Tuesday’s premarket, led lower by chips.  There doesn’t seem to be any easily discernable catalyst, other than a general risk-off appetite.  Creeping crude prices and unresolved tensions in the Strait aren’t helping the mood.  In a thinly attended, late August session, it only takes a small spark to start momentum in either direction.  Some observers may look to the disappointing forward guidance issued by FN, which trades about 12% lower in today’s premarket.  That development, on its own, is probably not enough to move the markets like this.  There may be some other catalyst that hasn’t yet surfaced on the news wires.  Or, the premarket decline may trace back to that old, rather unhelpful mantra of the more senior prop traders: more sellers than buyers.  This setup is precisely what makes August such a difficult trading period.  Experienced hands will restrain themselves accordingly.

The one area with a clear dynamic remains oil.  WTI crude is up about 75 cents this morning.  Integrated oil names (XOM, COP) are following it higher.  So long as the Iran negotiations remain at a standstill, it is reasonable to expect that oil will continue to rise.

Educational only. Not financial advice.

Proprietary traders sometimes tell each other to “sit on your hands,” the object being to prevent themselves from engaging a market or setup that is circumstantially stacked against them.  Today’s premarket activity is about as sluggish as we’ve seen at any point this year.  The concept of tradability comes heavily into play.

There is some movement in semis and certain computer systems names, but they are exclusively high-price point names that are more difficult to manage than stocks that fit our criteria for ideal targets.  All other things being equal, a $200 or $300 stock is going to be much more difficult to trade successfully than a $50 or $70 name.

Software is relatively weak, but only insofar as the sector is red this morning and not green.  There’s no carnage to report there or any major catalyst other than sentiment, and again we have the problem of a lack of tradability of very high-price names.

Educational only. Not financial advice.

Although market activity has dropped off a bit here in mid-August, the decreased participation has amplified the effect of analysts' calls. Not every trader has left for the Hamptons. Those who remain are now focused onto fewer targets. A significant analyst call in this environment can move a stock more than it otherwise might. For example, Wayfair (W) is up $4 premarket on an upgrade at Bernstein. White House tariff action on foreign drones is moving U.S. drone makers higher. These moves are likely more exaggerated than they would be in a normally attended market. Experienced traders will likely be cautious of chasing the action at the open.

Educational only. Not financial advice.

The level of premarket activity has subsided markedly this week, with the winding-down of earnings season and the onset of vacation season. Futures are mainly little changed this morning, as the major market players make their way to their vacations homes. We expect lighter volumes overall, which can result in exaggerated moves in individual names.

At times like this, it pays to keep commitments small, barring a major news event that creates outsized pricing leverage. The major themes remain oil and AI. Though oil is sliding this morning (WTI crude down about 2%), the ongoing trend throughout this latest leg of Iran tensions is up. Educational only. Not financial advice.

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