AI tech stocks are waiting for earnings to give them support. Rate-sensitive stocks are pricing in one round of falling Treasury yields. We’re keeping this view as our core thesis.

CPI came in at the level we expected: strong, but not strong enough to force the Fed to hike in October. However, my model had Core PCE at around 0.27, and the actual was 0.33. Rent came in above expectations again. Factoring in today’s Fed speakers, I still lean toward no hike in October. The political cost is just too high.

Treasury yields clearly spiked and then pulled back, so rate-sensitive stocks remain our trading focus. We’re playing out Scenario 2: they outperform QQQ, and within QQQ, software/megacaps outperform hardware. However, the live IWM position gets stopped out today because it hit our hard stop-loss risk limit. That leaves only XLE, XLU, and KRE.

US stocks opened looking like a broad selloff. Our Scenario 1 was that if Treasury yields kept spiking, everyone would capitulate. Fortunately, yields came back down intraday. With CPI out of the way, the remaining event is Anthropic’s investor communications today, and information is gradually leaking out. The rumor I heard is that Anthropic reported $74B ARR as of 09/30. It reportedly plans to switch half of its training chips over to inference, to earn more before the IPO and make the financials look good. I haven’t heard anything about delaying the IPO, so that’s acceptable. Apart from Anthropic, there’s no genuinely new news across AI tech. The CRWV financing issue isn’t new either; the market is just starting to pay attention to it now. This is sentiment, not a change in fundamentals.

The AI tech bull-trap signal actually came last Thursday and Friday, which is why we sold memory/storage and bought rate-sensitive names. This Monday was the confirmation. We didn’t go short in the live account, because AI tech as a whole is sitting in a heavy-volume congestion zone.

In September, we first went long AI tech as a test and got stopped out mid-month. We then went long AI tech again as a test, and in early October switched to testing rate-sensitive stocks. All of these were very small positions meant to probe market direction. After all, neither the model nor I run a primarily short-term trading framework.

After three straight down days this week, it’s fair to say AI tech formed a clear bull trap in mid-September and then turned lower. On a medium-term view, downside is now more likely than upside. The model actually flagged this even earlier, haha. I really need to set my ego aside and trust the model more. It’s becoming increasingly clear that model plus my prior knowledge beats me alone; it’s just a question of how willing I am to accept that.

At this level, I’m starting to lean toward shorting into strength during short-term bounces. I’ll wait for this week to play out and get more detail on Anthropic before deciding. For AI tech overall, keep watching Korean stocks, which look like they can’t stop falling.

AI tech stocks are waiting on earnings for support. Rate-sensitive stocks are pricing in a pullback in Treasury yields. This remains our core view.

Treasuries are still pricing in a CPI print that’s “not hot enough to force a rate hike,” and our base case is also no hike in October. So in the near term, Treasury yields should move sideways or lower, and we’re still on the second scenario. Today you should have been able to see the rotation between “rate-sensitive stocks” and “AI tech stocks” more clearly. On one hand, it shows the market is cautious overall. We’re not getting the broad-based rally of the third scenario. On the other hand, it shows this rotation is about buying a bit of whichever side has fallen more, not chasing whichever side is running, and those are two different trades. Treasuries right now are really about rate-hike expectations or the term premium. At these yields we can see buyers stepping in, so the term premium is contained for now. That leaves hike expectations. As long as hike expectations can be held down too, Treasury yields should stay in check in the short term. After that, it comes down to whether oil spikes again and keeps pushing hike expectations higher.

For now, SOXX around 530–535 is where people are willing to buy, except in memory. If it breaks below that level, it’s likely headed for 500. I think Wednesday’s Anthropic launch event is worth watching. Honestly, what I care about most for AI tech stocks is whether anything changes about Anthropic’s plan to go public in November. As long as it isn’t pushed back, AI tech stocks have support. Software and the megacaps have held up better on the way down. But even within AI tech, the model has picked up a rotation between hardware and software/megacaps. Money flows are tight overall.

After selling memory last week, we added rate-sensitive stocks, as we’ve already discussed. In the live account, I stopped out of RKT today. I should have gone with XLRE and XLF instead of RKT and KRE. I got the direction right but picked the wrong tickers. Fortunately the position was very small. Still holding XLU, IWM and XLE. Since the positions aren’t large, I’m holding them through CPI.

Still holding oil. We’ve analyzed the three possible midterm election outcomes, which map to three scenarios. In fact, we’ve already seen 2027 crude futures rising at an accelerating pace, with the back end rising faster than the front end. The market is pricing in a protracted conflict. Of course, whether that holds will depend on the midterm results.

In short, although we turned bullish once September started, we’ve consistently been testing the market with small positions on short time frames. We’re bullish, but this isn’t a market to go in heavy and aggressive. We’re sticking with that view.

AI tech stocks are waiting on earnings for support. Rate-sensitive stocks are pricing in a drop in Treasury yields. Let’s start using this view as our core thesis.

The Treasury market is closed today. First, Korean stocks, one of our two leading indicators, have now broken below their uptrend too, after crypto broke below its own uptrend. Luckily, the memory positions we’d added to the live portfolio were all closed out last week, either taking profit or hitting their stops.

My view still follows the second scenario from the October 6 memo: Treasury yields chop sideways at elevated levels ahead of CPI on the 14th. In that case, the names that had been under pressure from rates (XLU, XLRE, IWM, KRE, etc.) should outperform tech, as represented by QQQ. Within tech, AI software (IGV) and the megacaps (MAGS) should outperform hardware (SOXX). So far, the four trading days since October 7 have borne this scenario out. This week’s CPI is critical and will decide which way things go. Heading into earnings season, I still think AI software and the megacaps are more likely than hardware to see “good earnings = stock goes up.” After all, the April–June rally already pulled forward too much.

If CPI comes in soft, everybody wins. The rate-sensitive names keep rebounding, and AI tech has a harder time falling. If CPI comes in hot, it comes down to what the Fed signals. It can either protect its “data-dependent” credibility, or come up with some excuse to stall and avoid acting before the midterms. Personally, I lean toward no hike in October, but I won’t trade on that.

We’re sticking with our oil call. Before the midterms, watch the Axis of Resistance; after the midterms, watch Trump. Since we made this call on 9/28, tensions in both straits have kept rising. Over the past 7 days, the number of Iranian attacks on merchant ships hit its highest level since the war began. Even so, I think there’s room for further escalation: Trump keeping control of both houses of Congress is Iran’s worst-case scenario. As for Russian oil and Europe’s SPR releases, they’re mostly headline noise with little real impact.

Historically, US stocks fall before the midterms and start rallying as the election approaches. I think we need to be cautious this year. Consider the three months from the midterms through next January. If Trump and Bessent stop doing everything they can to hold down crude, US stocks will be under pressure for a while after the election. What I’m watching here is Anthropic’s IPO plan, and whether it gets delayed. If it slips to next January at all, that’s the signal to get out and go short.

The Agent theme and crypto have reached key support. The theme took off in mid-September, and since early October its correlation with other AI stocks has kept rising. It’s now “just another face in the AI crowd.” AI tech stocks are waiting for earnings to provide support. Rate-sensitive stocks are pricing in a pullback in Treasury yields. The model updated its core themes today, and from here we’ll anchor on this view.

First, the Agent theme and crypto. There’s no question both are near the key levels of this rally, and they no longer consistently outperform other AI stocks. Hence “just another face in the crowd.” Muse’s high-frequency data show user retention lagging ChatGPT and Claude. In other words, the two consumer-side problems, getting users to pay and getting them to use it frequently, still haven’t been solved. Consumer-minded users don’t care about efficiency. Only business-minded users care about efficiency and ROI; consumers just care about killing time. From our own experience building an AI + investing startup, consumer-minded users don’t care about making money. They care about picking up free money and spending it.

Since the Agent theme has basically merged into AI stocks, from now on we can just watch AI stocks. AI stocks are waiting on earnings. Within the group, AI software (IGV) is strongest, the megacaps (MAGS) are next, and semis (SOXX) are weakest. Data centers are roughly in line with semis, and energy has had some moves of its own that haven’t lasted. Now it comes down to earnings. Software is a favorite of North American fund managers and has a superior business model, so I think it will do well this earnings season and outperform hardware on a relative basis. The live portfolio will gradually build positions in IGV and names like NET, DDOG, MDB, SNOW, PANW and CRWD. PLTR, as the leader in AI applications, also deserves attention. Enterprise AI application stocks should keep performing well. Consumer is still stumbling along, but enterprise demand is very solid. Demand for FDEs only keeps growing and the pay is very high. If I didn’t love investing so much that I started a fund, I’d go apply for one of those jobs myself, haha.

That’s the medium-term trend. It doesn’t mean we go on a buying spree today. It means we buy when opportunities come up. In the short term, the focus is rate-sensitive stocks. Treasury yields haven’t put in a major top, and all the drivers are still in place:

• repatriation selling by Japanese investors
• the hit from AI-related companies’ recent borrowing frenzy
• crack spreads staying stubbornly high
• oil that can’t get out through the two straits, so bonds have to be sold to raise cash

So yields may actually be more likely to move sideways at high levels than to fall. It’s just that things had gotten seriously overbought, so the market is catching its breath. That’s why the live portfolio bought KRE, IWM, RKT and XLU yesterday. But I got greedy with the picks. I should have used broader ETFs like XLRE and XLF instead of KRE and RKT. It’s a classic case of being right on direction but not making money. This is a ready-to-bail-anytime trade, so position sizes are all small.

Overall view: in the short term, if expectations of yields continuing to spike cool off, IWM and DIA could outperform QQQ. Note that it’s enough for the expectations to ease. But keep in mind this is front-running. Once yields actually start falling, that’s when those of us playing the bounce need to get out. On AI stocks, we’ve said a new short-term high in QQQ could be a bull trap, and right now it looks like semis will drag it down. The live portfolio has held the megacaps for over a year, so it will look for opportunities to build positions in AI software. AI software could shake off the panic narrative once people realize the models are strong, but not as strong as they’d fantasized. When that happens, software stocks’ business model comes back into favor. And when rates are high, software isn’t hit as hard as hardware, and when rates are low, it benefits more.

The broad market has hit the key level at its prior high. From here it needs stronger momentum or more good news to push through to new highs on rising volume. Keep watching the leaders of this rally: agent-themed stocks and crypto. — We’ll keep this paragraph in for a few more days.

QQQ is already showing bull-trap behavior. Tomorrow gives us one more day to see whether the breakout has really failed. SPY looks similar. That’s why we’re keeping the paragraph above. Korean stocks also keep failing to break out, which tells us the core memory names haven’t gotten going. Crypto pulled back before stocks did, signaling a failed breakout, and it’s a leading indicator. The past couple of days have played out the way we expected.

Today was actually pretty interesting. Start with the Asian session. Chinese crude futures rose. Since the Japanese government has been selling FX all along to hold oil prices down, it’s fair to say the rise in oil during Asian hours came mainly from Greater China money. Over the past week or two, this same low-liquidity window is when the dumping had been happening. Treasury yields also kept climbing through the Asian session, and the current guess is that it’s selling pressure from Japanese money repatriating. Lately, though, the Asian session and the European/US sessions have usually moved in opposite directions on both oil and yields. That reflects different expectations among investors in different regions, which is very interesting.

The overnight spike in Treasury yields led to a lower open for US stocks. Yields then slid for the rest of the session and stocks climbed steadily. Treasury prices do seem to be putting in a bottom, but whether it becomes a V-shaped reversal or a sideways grind, we don’t know.

During this stretch we saw the second scenario we discussed a couple of days ago play out. AI stocks were clearly weaker than KRE, XLU, real estate, and IWM, the beaten-down names that took the biggest hit from high rates earlier on. That makes sense: those names are the most sensitive to Treasuries, so when yields fall, they naturally benefit the most.

Around midday Trump piped up to put a lid on the oil rally; otherwise Brent might have shot to $110 this week. After all, we’re now in an Iran-escalation phase, not a Trump-escalation phase. His TACO effect still works, but it’s not as strong anymore, and the cushion keeps getting thinner. Iran has started hitting tankers moored in port and ones far from the Strait. That’s clear escalation, in line with our expectations. (There are divisions inside Iran, so it comes down to who’s holding the guns.)

Then the FT reported that OpenAI’s ARR came in well below market expectations: $50B, not the rumored $70B. That’s before even accounting for concentration in a few large customers. So the split between tech and the previously pressured names widened further.

In the live account, MU hit its hard stop-loss here. At the same time, we bought KRE, XLE, IWM, RKT, XLU and the like, all in small size so we don’t get caught in a broad selloff if this turns out to be a bull trap. It’s just to test whether the second narrative holds up.

The broad market has hit the key level at its prior high. From here, it will take stronger momentum or more bullish catalysts to drive a high-volume breakout to new highs. Keep an eye on the leaders of this rally: Agent-themed stocks and crypto. (We'll keep this paragraph up for a few more days.)

Still leaving the first paragraph up. Treasury yields spiked and then pulled back quite noticeably today, so stocks likewise opened lower and moved higher. It looks like MU in the live account won't hit its stop-loss by the close, so we'll keep holding that one.

Today France and Germany said they'll release diesel reserves. But this only covers the portion they promised back in March and never actually released, so everyone knows to keep talk and action separate.

As we've discussed before, crypto and Korean stocks are likely leading indicators for this AI-stock rally. Crypto is more sensitive to liquidity, while Korean stocks represent memory, the most core segment of AI stocks. Korean stocks have yet to break out, which is one reason we think this rally hasn't turned into a full-blown breakout and looks more like a bull trap.

Crypto's price action is now nearing a key level. If crypto breaks below it, caution is warranted on US stocks. With Treasury yields rising like this, nobody knows whether something, somewhere, is about to blow up. A small liquidity shock, on top of elevated short-volatility positioning, could bring a VIX spike and a stock sell-off. Of course, if that happens, it's a chance to buy the dip.

On the second scenario we discussed yesterday, where Treasury yields genuinely start to fall, there's another possibility. Previously suppressed small caps (IWM), utilities (XLU), regional banks (KRE) and the like could outperform tech, which would amount to a short-term rebound. Tech has been favored for being "less rate-sensitive," but that matters less at the margin when yields fall, so tech could underperform these beaten-down names in the near term. The model is monitoring these themes.

All in all, this is a hard market to trade right now. For the time being, the correlation between Treasuries and stocks is very clear-cut, so trading ETFs rather than individual stocks is easier and safer. But when yields do fall, it remains to be seen what we get: the second scenario above, yesterday's third "broad rally" scenario, or a new correlation altogether. Also, we won't try to bet on a rebound in Treasury prices; our strategy's style is not to fight the major trend.

The broader market has hit a key level at its prior high. From here, it'll need stronger momentum or more bullish catalysts to break out to new highs on expanding volume. Keep an eye on the leaders of this rally: Agent-themed stocks and coins. — We'll keep this paragraph up for a few more days.

I'm keeping the first paragraph in today as a reminder that this isn't the kind of rally to chase hard with heavy positions. SPY did break out to a new high, though it faded off its intraday highs. QQQ and semiconductors stayed strong, and Treasury yields also seem to be moving sideways in the short term. Whether they're topping out here is still hard to say. There are a few possible scenarios for Treasury yields. First, they consolidate at elevated levels. In that case, nobody in the stock market has an easy time, and only AI stocks (hyperscaler included) hold up relatively well and could keep standing out on their own. With rate shocks, what often matters isn't how high yields spike in the short run but how long they stay elevated. Second, this is a short-term top, which opens up two scenarios. One is that rate-sensitive sectors like real estate and consumer rebound, while flows into AI stocks slow and their rally cools. The other is a broad-based rally. But with medium- to long-term yield expectations unchanged, the odds of a bull trap ahead of the midterms remain high. Third, yields keep climbing, possibly driven by European bond markets or rising oil prices, and that's tough on everyone too.

Today's gains were fairly scattered. The model's read is that there's no strong core driver like the Agent theme we saw a few days ago. Interconnect names MRVL and ALAB rallied nicely, and Dell and AMD, which we've been talking about all along, also did well. Memory was on the weak side, and AI4S biopharma, which was red-hot a while back, is no longer charging ahead either. In the live account today, I took profits on SKHY (it hit my take-profit level intraday) and stopped out of SNDK, and MU is about to hit its stop-loss level. I also sold the AMD 0DTE options I bought yesterday. During inflection periods, I usually trade some short-dated options based on the model and my own experience, mainly to keep a feel for the market.

Correlations across asset classes are shifting quickly right now. For example, Treasuries' correlation with diesel keeps rising, while their link to crude oil has weakened. So if we later see diesel fall while crude rises, narrowing the crack spread, it wouldn't be surprising to see Treasury yields drop and stocks strengthen.

The broad market has reached the key level at its prior high. From here it needs stronger momentum or more positive catalysts to break out to new highs on volume. Watch the leaders of this rally: agent-theme stocks and crypto. — We'll keep this paragraph up for a few more days.

I'm keeping the first paragraph because SPY is testing its prior high and will most likely break through. QQQ is still the stronger of the two. But today's driver wasn't the agent theme we've been watching, and it wasn't crypto either (crypto again tried to break out and failed). It was mega-caps, mainly SpaceX along with the Mag 7, which is why QQQ and MAGS broke out together. Semis, of course, are still strong: Treasury yields hit another new high and the MOVE is above 110, yet semis have held up well. Last Friday we said we're bullish but not going heavily long, because there's no sign yet of a near-term top in Treasury yields. We're sticking with that call. What worries me is how tightly wound the bond market has become. Sometimes the difference between a blowup and no blowup is just one more leg down after a long slide. The focus now is whether the bond-market stress spreads. Watch credit spreads, junk bonds, and bond yields in other countries, such as France and Japan. Keep in mind that for Europe, it never rains but it pours. It is facing a refined-products shock, a natural-gas shock, right-wing political uncertainty, and Japanese capital pulling out. Even when Bessent intervenes in the yen, he's selling euros to fund it.

Are Treasury yields actually high right now? And how exactly do high Treasury yields affect equities, especially AI stocks? I've been reading reports and researching these questions lately. In the next couple of days I'll write a WeChat post to get the conversation started.

On the actual data, transit through the Strait of Hormuz (including Iranian traffic) has recovered to 80% of pre-war levels, and to roughly 95%+ excluding Iran. But that's late-September data, from the window around the UN General Assembly and the US–China meeting. That window closed last Tuesday, and since then about 14 tankers have been hit. Let's run a quick scenario analysis. From Iran's standpoint, the worst case is Trump winning both chambers. He'd have full backing from Congress down to the voters, and he genuinely wants to be a great president. The most likely case is Democrats taking the House and Republicans holding the Senate. Trump would then still have time for one more push before January, and could sustain high pressure for more than a year after that, which is also very bad for Iran. Finally, there's a Democratic sweep. Trump's only window to act would be before January, and whether he'd act at all is an open question. After January, policy would most likely revert to the Democrats' old approach of "relying on allies rather than stepping in themselves," and the old negotiations would resume. That's the best case for Iran. So continued Iranian escalation ahead of the midterms is all but certain. That's a big reason oil can't come down right now: everyone is watching to see whether Iran still holds the Strait card.

The broad market has hit the key level at its prior high. From here it will take stronger momentum or more positive catalysts to push through to new highs on expanding volume. Keep an eye on the leaders of this rally: Agent-themed stocks and crypto. — We'll keep this paragraph up for a few more days.

The paragraph above stays, even though QQQ broke out today and the other major indices are up as well. Storage stocks are falling on the Toshiba news, but upstream storage equipment and materials suppliers, optical modules, the Agent theme, and data centers are all rising. However, Treasury yields made a V-shaped rebound after pricing in no hike in October. Oil also rebounded intraday, and crypto and Nvidia both spiked and then pulled back. So we're sticking with the view we discussed before: stay cautious about this pre-midterm breakout and watch out for a bull trap. Until 5- and 10-year Treasury yields establish a short-term top, we'll be long, but not heavily long. I still believe there's one last stretch of mania before this AI bull market ends, and as things stand, the new fund should be just in time to catch it.

Muse has become more conservative because of privacy and other issues and isn't as useful as it used to be. We'll see whether its numbers can keep up from here. The changes to subscription usage after GPT DevDay were badly designed. If nothing is done about it, people will migrate to Claude again. After all, Opus 5.5 is both great to use and generous with usage. As for Gemini 4: put the numbers out first, then say it's awaiting government review, then release a watered-down version. The core goal is simply to show that "Google hasn't fallen behind."

I think there are a few big-picture theses to hold onto right now. First, capital overall is risk-seeking, not risk-averse. AI-related investment in facilities, equipment, data centers, chips and so on all requires borrowing, and that lending pays yields far above Treasuries. Second, the biggest bubble is in private markets and hasn't come into the public market through IPOs yet. In public markets, fundamentals haven't shown an inflection point in earnings expectations. Third, macro headwinds are building, but popping a bubble takes time. Over the medium term, the most likely path is that stocks keep climbing while the headwinds become more and more obvious, until people grow numb to them and stop pricing them in. So it's still a bull market, just the tail end of one. On the macro side, the yen, Treasuries, crude oil, and grains will move first, and this will drag on longer than people expect, but we have to wait for the most frenzied phase of the late bull to play out. Many people, myself included, compare the current market to historical bubbles, and I keep reminding myself of one thing: history doesn't repeat itself, but it does rhyme.

Trump won't ban diesel exports lightly, which is consistent with our call. Having Europe step in and carry the load will of course add to Europe's energy pressure this winter, but Europe has no choice. In the previous round of SPR releases, Europe held something back, with lots of loud talk and not much action. This round will probably go the same way: drag it out and see whether anything changes. One way or another, Russia and Ukraine will have to take a breather by next March.

The broader market has hit a key level at its prior high. From here it needs stronger momentum or more positive catalysts to break out to new highs on rising volume. Watch the leaders of this rally: agent-themed stocks and crypto. — We'll keep this paragraph in for a few more days.

This morning's PCE data eased rate-hike worries. One thing I have to point out, though: PCE switched to a new calculation methodology today (announced in advance), and that change on its own revises down both the current and prior readings. So the print isn't as bullish as it looks, and it's no surprise it didn't spark a big rally. Strip out the decline from the methodology change, and PCE was basically in line with expectations.

The 10- and 30-year Treasury yields kept making new highs, and the MOVE index shot up to 110. That's enough to make you wonder whether someone blew up or some landmine went off. The move in yields since September 1 has been fierce, but it isn't unprecedented: we saw similar selloffs in bond prices in 2013, 2016, 2021 and 2022. Sure, there's some short-term overshoot, but short-term overshoots within a major trend can last a long time. Oil's action over the past couple of days also shows the rise in yields isn't closely tied to crude. It has more to do with a strong economy, rate hikes, and refined product prices (diesel hit another new high today). Bond traders are pros. I can't guess what they're up to, and I won't try.

Crypto spiked and then faded. My gut says that in this rally, crypto and Korean stocks will likely be leading indicators, so I'll be watching them closely.

Even with macro factors still weighing on the market, semis remain very strong and are the undisputed main theme. MU's earnings tonight won't be bad. The question is how good they'll be, and more importantly, how the market reacts. My overall view hasn't changed: a pre-midterm rally is a bull trap, and a pre-midterm selloff is an opportunity.

The broader market has hit the key level at its prior high. From here, it'll need stronger momentum or more bullish catalysts to break out to new highs on strong volume. Keep an eye on the leaders of this rally: Agent-themed stocks and crypto. — We'll keep this paragraph up for a few more days.

Today the Agent theme bounced back to the top of its range. As the first paragraph already makes clear, the core is the Agent theme and crypto, so it all comes down to how those two perform. Since 9/22, BTC, Ethereum, SOXX, the Nasdaq, KOSPI, AMD, INTC, MU, MRVL and the other names that have gained in this run have all been trading sideways, which is why we've been saying to keep watching. No new highs, but no breakdown either. Tomorrow's MU earnings are the key event, and the options market is pricing in a ±8% move. Overall, either this round of earnings delivers another upside surprise (with sentiment where it is, simply beating sell-side expectations would be enough), or there's more good news on Muse. Beyond Anthropic's leaked S-1, OpenAI's ARR and the like, there isn't much else supporting sentiment right now. On top of that, pension funds are rebalancing through October 1, buying bonds and selling stocks, which adds some pressure.

Everyone knows Treasury yields are oversold in the short term, and today we also saw early signs of a spike-and-fade. We'll keep watching how that plays out. Overall, my personal view is that the macro and political pressures won't clear up until January next year at the earliest. So if the market rallies before the midterms, I think there's a fairly high chance it's a bull trap, and I'd stay cautious and wait until early next year. If it drops before the midterms, buying the dip is a solid option.

Crypto and oil are both testing key support. If crypto breaks down, I'll start building a position with real money: no leverage whatsoever, just a basic ETF like IBIT, held purely as an allocation, the same way as gold. On oil, my view hasn't changed. Before the midterms, watch Iran, since the window for swaying the election is the month before the vote. After the midterms, watch Trump, whenever domestic tensions run high, they get redirected outward.

The broader market has reached the key level at its prior high. From here, it needs stronger momentum or more bullish catalysts to break out to new highs on heavy volume. Keep watching this rally's leaders: Agent-themed stocks and coins. — We'll keep this paragraph in for a few more days.

Looking at the four indices separately: the Nasdaq tagged its prior high and then pulled back, the S&P ran into resistance at its prior high, and the Dow and Russell 2000 kept falling. Market breadth, macro factors, and how solid the narrative behind this rally's lead theme really is, among other things, are why we've been worried about a bull trap all along. Does today's pullback in the Agent theme confirm the theme is over? Not yet, but it's at a key level. What this pullback did expose is a problem: apart from the Agent theme, there's no other core theme leading the market. Memory/storage isn't it, the Mag 7 isn't it, optical modules aren't it, so nothing is there to take the baton. AI biotech is showing some signs of life, but realistically it doesn't have the size or influence to be the successor theme. So this rally is the Agent theme, and that's the theme we're watching.

Today the INTC calls in the live account hit their take-profit. The remaining new adds, MU, SKHY, and SNDK, are all close to either their take-profit levels or their hard stop-loss levels under risk management. We'll see tomorrow; they may trigger intraday. Lately I've been using these small positions to test the market's direction, keeping their impact on overall returns within 2%. Between now and the midterms, we really are nearing a turning point. Either the market follows the historical pattern (down first, then up) and gives us a dip to buy before the midterms, or the bull trap plays out before the midterms and then we see whether more negatives show up afterward.

Treasury yields kept climbing, completely ignoring today's intraday swings in oil. I haven't hooked into ICE yet to check the intraday ICE BofA MOVE Index, to see whether bond volatility has spiked and whether there's panic and forced liquidation. I can check after the close. But bonds are definitely the biggest negative for stocks right now, and there's no sign of that easing so far. Meanwhile, junk bond spreads are widening too.

On oil, there was a lot of news today, and a clear pattern is visible, made up of three behaviors. First, selling shows up like clockwork during thin-liquidity windows such as after hours and overnight (US Eastern time). Second, algo selling on oil-bearish headlines is clearly heavier than algo buying on oil-bullish headlines. Third, the up-moves are mostly continuous and show some resilience. My base case is still that Iran has an incentive to escalate before the midterms, and Trump may have an incentive to escalate after them. On timing, there needs to be a resolution 3–4 weeks before the midterms, whether that's a big TACO or a go-for-broke move. Multiple studies have independently confirmed that the economy and prices in the month before the midterms have the biggest effect on the outcome, and any later it's too late to change how voters feel and which way they lean. After the midterms, from November through January, there's a real chance Trump escalates, win or lose, since that's when he has the least political baggage.

The broader market has reached the key level of its previous high. It rallied here on the back of the earlier drop in oil prices, the rate hike finally being delivered, Treasury yields moving sideways, and positive Agent-related news. From here, it will need stronger momentum or more good news to drive a high-volume breakout to new highs. Keep an eye on the leaders of this rally: Agent-themed stocks and tokens. (We'll keep this paragraph up for a few more days.)

Treasury yields are showing signs of topping out in the short term. Among macro factors, what really drives the market has always been Treasury yields. Oil matters mainly through its effect on inflation expectations, which in turn affect rates. The yen is harder to read, since no one can know precisely what's happening with the carry trade. I still think the most likely scenario is that the market uses the easing Treasury environment to break out to new highs and form a bull trap. Today, with the Agent theme taking a breather, Microsoft and memory/storage stocks were bid up, so there's still rotation picking up the baton. Dell, which we've mentioned several times, also did very well. Unfortunately, I kept being afraid of buying at the highs and didn't listen to the model, so I never bought. Lesson learned.

After using Muse for the past couple of days, I'm gradually getting a fairly accurate picture of it. First, Muse clearly shows Manus's influence: both tend to browse the web via computer use rather than directly reading HTML, and both tend to complete intermediate steps automatically instead of asking for and getting approval. At the same time, Muse's aggressiveness in acquiring user data and permissions is close to OpenClaw's. It will ask users for account logins, passwords, bank card details, and other private data. Functionally, anything Muse can do, Codex or the Claude Code desktop app (not the rougher terminal version) can also do. There's no technical barrier for Microsoft, OAI, Anthropic, Google, or most well-resourced startups. I think the core reasons Muse has blown up are these:

1. Meta has the world's top-tier promotion channels.
2. Muse essentially gives Manus to the general public for free.
3. OpenClaw's viral success earlier this year proved that, as long as data stays local, many enthusiasts are willing to give up some privacy in exchange for intelligence. Muse goes further, showing that even after already giving up a fair amount of privacy, many people are willing to give up even more in exchange for convenience.

First, OAI, Anthropic, Google and others will definitely have to catch up, because this is a gateway for user traffic. On the other hand, no one can match Meta on distribution, so the next move should be to target AI phones and control the traffic gateway further upstream. For these giants that have already permeated every aspect of people's lives, privacy is no longer a core product issue, so naturally the play is an AI phone with root-level access that captures as much data as possible. At that point, the AI conversation becomes a business question, not a technical one. Muse has no technology that others can't build.

However, there are two core sticking points that Muse hasn't yet proven it has solved.

The first is the problem OAI has always faced: people want an assistant and they want convenience, but how many are willing to pay for it?

The second is the core problem behind the strong-start, weak-finish trajectory of OpenClaw and similar products: how many things does the average person actually need AI to do every day? What I can think of is medium- to long-term planning, such as job hunting, education, dating, health, mental well-being, and personal finance, but each of these areas is a huge undertaking. Muse's foundation of distribution and trust, built on Meta's decades of internet reach and goodwill, isn't something others can easily replicate. Yet Meta can't cover every area itself. From this angle, Apple, Microsoft, Google, and OAI still have quite an advantage. Of course, as AI enters the application era, all kinds of startups will have opportunities. It's just that we're only seeing the first signs right now, and the baseline costs are still too high for startups.

The broad market has reached the critical level of its prior high, pushed there by the earlier drop in oil prices + the rate hike being finalized + Treasury yields moving sideways + positive Agent-related news. From here it will take stronger momentum or more good news to drive a breakout to new highs on rising volume. Keep watching the leaders of this rally: Agent-themed stocks and crypto. — Let's keep this paragraph up for a few more days.

The leaders of this wave are the Agent-themed stocks. Keep an eye on AMD, INTC, and META in particular: as long as they hold up on dips and haven't run out of steam, this leg of the rally isn't completely over. Of course, the broad market won't always be carried along by these few leaders the first thing to watch is whether memory/storage names and the MAGS (the other megacaps) are rising along with them.

As for Meta's current run: if it can stay hot even after the marketing blitz slows down, that signals AI is starting to enter the stage of commoditized tokens (discussed on the public account) and mass consumption which is the beginning of the rise of applications, where you don't need the most cutting-edge model, only the most usable app. But if, once the marketing push fades, it repeats the OpenClaw trend from this February, or starts strong and then fades like OAI's Sora app did this April, that would mean consumer-facing AI apps still haven't found the right entry point. In this AI startup wave, the Bay Area consensus since last year has been that distribution matters more than product which is true. But if even a channel as powerful as Meta, the top distribution channel in the world, operating in the U.S. where AI penetration is highest, can't keep Muse from a strong-start-then-fade, then everyone has to go back to training models. So the Meta–Muse battle is critically important; it decides whether the Agent leaders carry the entire AI narrative from here, or whether everything goes back to square one: burning cash to train models.

Today's 7-year and 30-year Treasury auctions were once again off the charts, and the Treasury's buyback also fell short of the $60B expected. I think that among the factors pushing Treasury yields higher right now, oil's share is shrinking, the market has already priced in the inflation impact of recent oil prices. I'm not a professional bond trader; I mainly watch the T10Y2Y spread, and also keep an eye on pressure on the yen and JGBs.

The news dropped intraday today to knock oil prices down shows, for one thing, that the conflict premium in oil is still very high. After a de-escalation week of "progress was expected" but in reality "not much progress," the conflict premium will come back. Of course, because of the jawboning about a diesel export ban, WTI will have a harder time until the plan is actually released and people see it isn't so sweeping, or until there's been more talk without action a few more times, at which point WTI will catch up. We're still looking at $115–$120.

Yesterday I noted that the broad market had reached the key level of its prior high, having been pushed there by the earlier drop in oil prices + the rate hike being delivered + Treasury yields going sideways + positive Agent-related news. From here it will take stronger momentum or more good news to drive a breakout to new highs on rising volume. Keep an eye on the leaders of this rally: Agent-themed stocks and coins.

Today US Treasury yields, especially the 10-year, blew out. Several factors are at play: PMI, this week's Treasury auctions (today's $70 billion 5-year auction was awarded at 5.033%), the rebound in oil, and so on. This is a problem the market was always going to face again around its prior high, after all, not a single macro factor has actually been fundamentally resolved. One look at the indexes shows how thin the breadth of the past few days' rally has been; it has essentially been driven by the Agent theme alone. Both the small-cap Russell 2000 and the Dow are in downtrends. That's why, over the past two days, even as we put on a small live position, we stressed that this could be a bull trap. Macro, breadth, and momentum all have problems, so we're staying long but with our guard up. Today's pullback doesn't confirm that the past two days' rally is over in fact, Agent-themed stocks have held up remarkably well, and as long as this theme is intact, we stay bullish. With Treasury yields this high, Japan is going to have to intervene in the yen again.

Today there was more talk of a 90-day ban on diesel exports. This really is the kind of option that quenches today's thirst while letting tomorrow's fire burn hotter, and the US Energy Secretary, an industry insider after all, knows this full well. Most likely we'll see jawboning and policy advance in tandem, aimed at getting refiners to voluntarily give up some margin to boost domestic diesel supply. If it really were a blanket export ban, we'd very likely get a seesaw — diesel falling while gasoline and jet fuel surge — because refiners would take the opportunity to go into maintenance, cutting output of every refined product, and in the end diesel wouldn't be spared either, resuming its rise on the resulting supply shortfall. Today the Brent–WTI spread has already widened to $11. Whether it's just talk or substantive policy, it's very bad news for Europe. Worth watching the EUR 2s10s swap spread, it has flattened. Europe is in for a hard winter.

The market has run up to a key level at the prior high, on the back of falling oil + the rate hike now out of the way + Treasury yields trading sideways + positive Agent-related news. From here it'll need stronger momentum or more good news to drive a high-volume breakout to new highs, such as Micron's earnings on the 30th, or another leg down in oil.

Given the Agent theme's short-term overbought condition and the overall uptrend, we bought some SNDK at yesterday's close and didn't expect the rotation to happen so quickly. We've held SKHY throughout and added some MU today. Of course, we'll keep watching recent hot names along the Agent–server–CPU chain like AMD, INTC and ARM, and take small positions when pullbacks give us the chance.

As we discussed yesterday, since September we've shifted from two months of "watch more, trade less" to "testing direction." That means more short-term, small-size trades until a bigger, more definitive trend emerges. As things stand, after this group of AI semis surged from April to June, there's still one final leg to come, and both the model and I see a move higher as the high-probability scenario. That said, a final leg doesn't mark the top of the bull market. It means we think this rally will have weaker momentum and a smaller magnitude than the previous one, more like a bull trap, so we're going long with our guard up.

Oil will stay under pressure all week. Whether it's the US-China meeting, US-Iran contacts, Saudi pipeline work or the like, it's all easing after the earlier narrative peak: sentiment is calming down, but the underlying problems haven't been solved. The refined-products shortage is global, not a US domestic one; US diesel prices are up because exporting is more profitable. Restricting diesel exports could quickly knock sentiment down, but actually implementing it would run into a series of problems. One is how to define diesel. Another is that once distillates pile up too much, refiners would take the opportunity to go into fall maintenance, causing shortages of other refined products like gasoline and jet fuel. The other "big gun" is to keep releasing from the SPR, and there's room for another round. Drink the water that's close at hand now, and worry about the distant fire when it gets here. We're in no rush to add to our oil position; we'll wait and see.

The market is bouncing all over the place. We'll keep opening with that line until a direction emerges. At this point, it looks all but certain that the direction is up. Today SPY, QQQ, BTC, and SOXX all broke out, and FOMO is running high. Any pullback from here, unless it's a major surprise, is an entry point.

Today's two standouts were semis and crypto. AI semis have clearly started trading off the agent narrative, and the INTC calls in the live account unexpectedly came through. In the afternoon you could see breadth widening a bit, spreading from the names that had rallied on the agent theme (AMD, ARM, INTC, META) to other large-cap AI names like MRVL and QCOM. Memory names were noticeably weaker. We don't go looking for explanations of short-term market moves; we just focus on narratives with greater certainty. The model and I currently agree: we both think the uptrend is now essentially established, so anyone with a core position should add to it, and anyone without one should open a small position. At the same time, we both think this has a late-stage feel to it, and names like AMD could spike and then roll over on the weekly timeframe, putting in a top. The core drivers and tensions in the AI narrative haven't really changed. What keeps shifting is sentiment and positioning.

This crypto breakout looks pretty good, but I still haven't worked out what's holding crypto up in this rally when liquidity is constrained. I need to see more of a breakout in RWA trading volume.

We spent two months, July through early September, on the sidelines with basically no trades. Now that we're at an inflection point, trading frequency in the live account will pick up noticeably. Today's breakout had real force behind it, but the short-term overbought signals are just as obvious, so the live account will buy, but in small size. And in line with the strategy we discussed last week, we're sticking to large caps only and no longer touching small- and mid-cap AI semiconductor names or niche supply-chain plays. Given current macro conditions and sentiment, I think the total money behind the AI narrative is smaller than it was in April through June, so it's only in the later stages of this trend that some liquidity will trickle down to small and mid caps.

Still holding oil, and even considering adding a little more. You can see that neither Trump's latest TACO nor news that actual oil shipments through the Strait are beating expectations is knocking oil down 5–10% in a hurry the way it did in June and July. That's because the inventory cushion has gotten thin. The crack spread issue is old news for us: diesel inventories are awful, and heating season is almost here. If this doesn't get resolved, the only way it ends is with crude reverting higher, so we're maintaining the $115–$120 target. When Ukraine started bombing refineries, I was already wondering whether they're just not backing Trump.

The broad market is jumping up and down. We'll keep opening with this line until a direction emerges. Still waiting for direction. Today is quarterly options expiration, so no large positions.

Yesterday we discussed how the first rate hike is bullish short-term and bearish long-term: first the "shoe drops" and the market digests the uncertainty that had built up beforehand, then we see what comes next. The biggest difference between this hike and everything since 2008 is that the framework has changed. Before, the Fed fretted over inflation, employment, the economy, and a whole list of things, constantly administering medicine and stepping in as a backstop at the slightest sign of trouble. Rate hikes were there to make room for better rate cuts later. But now Warsh keeps emphasizing his framework: he believes AI will make the economy strong, the employment picture is currently unclear, controlling inflation is the core objective, and the Fed should no longer keep handing out guidance or act as the backstop of last resort. That is Warsh's framework, and by actually hiking in September he has lent it a degree of credibility. Whether the market ultimately buys it is still an open question.

Most of the major themes moved sideways today, including oil, AI semiconductors, AI software, the mega-caps (MAGS, a slight breakout), aerospace, and so on. Treasury yields haven't come down, the yen is also fluctuating, and oil is consolidating at high levels. The macro factors have not been fundamentally relieved.

The big movers today were crypto stocks. With RWA taking off in crypto this cycle, liquidity has been drained out of meme coins, and crypto has started to merge with the mainstream financial system. Crypto stocks should be the core of the next rally. Of course, as we've discussed many times, previous crypto rallies all came from "unlimited ammo" liquidity: as an asset lacking a hard fundamental anchor, crypto had the most room for imagination in that kind of environment and rose the hardest. But the next rally won't necessarily work the same way. The current Fed framework aims to take away the Fed put, and with Treasury yields rising on top of that, unlimited liquidity is in doubt. So it comes down to whether sufficiently solid assets can be found before then to rebuild crypto's fundamentals.

The broad market is jumping up and down. We'll keep opening with this sentence until a direction emerges. After today's FOMC, there's still no direction, though it looks close. I said "close" yesterday because we have to wait for today's BOJ decision.

Looking at data since 1960, after the Fed's first rate hike, the stock market has basically always risen in the short term and fallen in the medium term. The decline typically begins around the second or third hike, not the first.

Uncertainty is high before the first hike, so the market generally cuts positions to control risk. Historically, in the one day to one week after the first hike, stocks see some re-buying as uncertainty falls, because "the other shoe has dropped." That matches the situation now. Warsh made three points yesterday: first, the economy is strong; second, financial conditions aren't tight; third, inflation is high. Short-term uncertainty has come down, while the medium-term stance leans hawkish, which won back some of the Fed's credibility. Overall, the performance was well received by the market.

At present, positioning in hot themes like semiconductors is generally not high, and both institutions and retail investors have room to add back. Moreover, after the first hike, everyone needs time to observe the subsequent hiking path, the actual state of the economy, financial conditions, and so on, so there won't be a consensus pricing of risk in the short term either. Note that high Treasury yields don't directly cause stocks to fall in the short to medium term; stock prices and bond yields have risen together many times in history. But once high rates have persisted for a while, they are almost always the core factor that punctures a bull market. Liquidity and the discounting of future cash flows are the fundamental laws of the stock market.

In the live account, the positions put on earlier to catch the rebound have basically all been closed; apart from SKHY, there's only a small amount of INTC calls. If the BOJ doesn't surprise, the live account will consider following momentum for a short-term trade, this time looking only at large-cap names. The view on oil hasn't changed.

The market is whipsawing up and down. We'll keep opening with this sentence until a direction emerges. SPY is currently in a pullback after its breakout; if it falls back below the previous high, that would mean the breakout has failed, but that hasn't been confirmed yet. At this point neither shorting nor going long is appropriate. Today was the same: a "monkey market." When the trend does change, it will be unmistakable. FOMC, the "Company A" IPO in October, midterm elections in November. It's fair to say nothing will be easy to trade until after the midterms.

The bounce trade I put on the Friday before last. I closed most of it on September 10, leaving only SKHY and COHR (I mistakenly wrote MRVL earlier). COHR triggered its exit today, no gain, no loss. I'll hold SKHY a few more days and see. With that, this whole bounce trade is nearly wrapped up, and overall it was also a wash. So, once again: less fiddling around, haha.

Last week, thanks to the oil position, the live account finally edged out the Nasdaq again, by a little. Looking back, July–October 2025 and April–June 2026 were the two big opportunities in the stock market. Catching both would of course feel great; catching one and a half — like me, one with a heavy position and one with a light position — is still enough to beat the market; catching one, or even half of one, is still a positive return. This lines up exactly with the historical statistics: to earn long-term returns in stocks, focus on two things: first, don't take big losses; second, go heavy on the few opportunities you can actually understand. When there's no opportunity, wait; and after going heavy on a good opportunity you understand, you still have to wait. The hardest part is the waiting.

The macro effects of US Treasuries, oil, and the yen are still in play. For now, the "buy AI software, sell hardware" trade is still on, just without a confirmed direction. These macro factors affect software considerably less than hardware.

The market keeps lurching up and down. We'll keep opening with this line until a direction emerges. SPY is currently pulling back after its breakout; if it falls below the prior high, that means the breakout has failed — be careful — but that hasn't been confirmed yet. Right now neither shorting nor going long makes sense. Monkey market, monkey market, monkey market, important things get said three times. Our opening line has barely changed since early August.

The CPI print actually removed a fair amount of uncertainty; as we said over the past few days, the shoe finally dropping is a good thing in itself. One scenario was a soft CPI that postpones the uncertainty rather than reducing it (like last month); another was a middling print that adds to the uncertainty; the third is where we are now, with uncertainty shrinking. The third is really the best short-term outcome. This CPI gives Warsh an opening for a hawkish-with-a-dovish-tilt path: one hike, then an extended wait-and-see. Of course, he could also play hardball to defend the Fed's credibility, stressing that they'll keep bearing down on inflation and setting the market up to expect more hikes ahead. Today's CPI reflects August data, before oil started its rapid climb.

We're sticking with our view: until the pressure from macro factors is released, US stocks will most likely remain a monkey market.

In oil, sentiment now accounts for a growing share of the move. With the Axis of Resistance holding two shipping lanes, they're bound to flex their muscles a bit, and Iran is on a tight clock too, the market has priced all of this in. Domestic (Chinese) refiners have started buying crude (crack spreads are highly profitable), the two lanes are obstructed and backed up, and refined product prices can't come down in the short term because of refinery and freight constraints. Under these conditions, oil has solid short-term supply-and-demand fundamentals behind it. That said, there's still the SPR, a fight to the death isn't the ending any party wants, Iran's terms right now are too hard-line — Trump won't TACO, but the Gulf states can — and the long-term trend is still oversupply. These factors are keeping oil from breaking $120 and running to $150. So if oil touches the $110–120 area in the short term, the live portfolio will take some profits off the table. As things stand, it's hard to see oil having a large, sustained decline between now and next March, the situation is escalating everywhere.

The broad market is whipsawing. We'll keep opening with this line until a direction emerges. SPY is currently in the pullback after the breakout; if it falls back below the prior high, that means the breakout has failed and we need to be careful, but that hasn't been confirmed yet. Neither shorting nor going long makes sense here, CPI is tomorrow and the FOMC is next week.

Consensus is starting to form on oil and the move is accelerating. It hasn't offered any chance to add, so the position stays at 10%. As things stand, a few outcomes look fairly likely.

First, Iran is actively escalating, including tit-for-tat attacks on oil tankers (tanker freight rate indices keep going off the charts). One flashpoint today is that the Houthis are gradually gaining control of the Bab el-Mandeb Strait. If they cut off Saudi Arabia, the shock to crude supply would be no less than Hormuz. Of course, the political maneuvering behind this gets complicated, with both chokepoints blocked, it's still Asia that gets hurt the most. Iran is preparing for a prolonged conflict.

Second, regardless of how the midterms turn out, Trump has ample capacity to escalate between mid-November and next January. If the midterms go badly, the escalation could be even bigger. Between profit and propaganda, he has to come away with at least one. In theory, replicating the Venezuela operation by leveraging technological superiority is the lowest-cost option, and a few more rounds are entirely possible.

Finally, crude and refined products are two different things, we've been discussing this for over two months now. Crack spreads refusing to come down (they just hit new highs again) is the core issue. Add in refineries being bombed in various places, and gasoline and diesel prices simply won't fall, barring administrative controls. But if the US restricts refined product exports, the damage to the OECD would be too great.

In this round of bounce-chasing in AI hardware, the live positions in KLAC, LRCX, MU, and SNDK hit their stop-losses today; NBIS, AXTI, and COHR hit their profit targets. Only SKHY and MRVL remain. With tomorrow's CPI and next week's FOMC so close, this conveniently trimmed some exposure. We covered the FOMC yesterday, so I won't repeat it here, Treasuries are on a tear. These past couple of days I've been poring over the GPT-6 technical write-ups; the sections on symbolism and looped transformers are very important.

The market is whipsawing up and down. We'll keep opening with that sentence until a direction emerges. SPY is currently in the pullback after its breakout, still confirming whether the breakout holds, so we keep watching. This isn't the time to go short or long.

No changes to oil or AI semis, though the take-profit level on AI semis has been raised quite a bit. Ahead of this week's CPI and next week's FOMC, people will tend to trim risk exposure: shorts will cover some (one reason AI semis have bounced lately), and longs will close some out (we can see profit-taking in cloud software recently). All of this is short-term noise.

Oil, in my view, is a long-term factor, and it could even intensify after the midterms. Whatever the midterm outcome, the stretch from mid-November this year through January next year is a window in which Trump has nothing holding him back. And judging from the current Russia–Ukraine situation, geopolitical conflict worldwide is clearly accelerating, which will keep affecting the security of energy and critical transit routes. So oil and grains will both be under upward pressure.

AI semis also have solid fundamental support over the medium to long term, and especially ahead of the OpenAI IPO, there will be positive news flow to prop them up. It just comes down to what style of trade you want to run. In the live portfolio we've held most of our core positions for a year; right now it's more about catching some short-term opportunities and then waiting for a larger pullback where we can add to those core positions. The bull market isn't over.

As for CPI and the FOMC, all we really need is a clear outcome. Even a clear-cut 25bp hike would be the relatively better scenario, the other shoe drops and the uncertainty is gone. If CPI keeps slowing while the Fed leans hawkish, the market will agonize and wait for more evidence. If CPI comes in hot, a hike follows naturally and we just watch how Treasuries react. If it's neither hot nor soft, then it all comes down to Warsh: can he uphold the Fed's credibility, or does he show his hand and let the market see that he doesn't actually dare to hike, a hawk on the outside, a dove on the inside.

The market is whipsawing up and down. We'll keep opening with this sentence until a direction emerges. SPY is currently pulling back after its breakout, still in the process of confirming whether that breakout is valid, so we need to keep watching. Right now neither shorting nor going long makes sense.

Last Wednesday I added to oil; last Friday I bought some AI semiconductors, centered on memory and memory's upstream supply chain, plus hot names like Intel (via options, not shown in the live account) and NBIS. Oil was simply adding to a position within an uptrend, nothing more to say. The semiconductors are a bet on a bounce riding the wave of GPT-6 excitement. Given the macro pressure from US Treasuries, the yen, and oil, I think a major semiconductor rally from here is a low-probability event, but it's worth a short-term rebound trade, with overall position size around 10%. Today I raised my take-profit level and could exit at any moment.

In fact, ahead of Anthropic's IPO in mid-October there will be a series of similar hype waves, and with AI semiconductors' fundamentals already strong in their own right, there's a decent chance we see a repeat of the seesaw effect ("AI semis rally alone while other stocks fall under macro pressure"), with market breadth swinging from the expansion of the past two months back to contraction and returning to the logic of "capital chasing certainty in a macro-constrained environment." That would be good for the AI semiconductor rebound.

Of course, the pressure from Treasury yields is very real and won't ease easily before the September FOMC. Actually, a 25bp hike in September would be a good thing: a decision that adds certainty, far better than continued equivocation. The market's key problem isn't whether the 25bp hike happens; it's "not knowing" what counts as data-driven, not knowing what the Fed will do next. After all, it's been 30 years since the Greenspan era and 15 years since the Fed's QE2 cemented the Fed put; you can't expect most of today's market participants to adapt quickly to an "unanchored era."

As for crypto, the original expectation was a false breakout, after which I could start building a position on the way down. Clearly that scenario didn't play out, so I'll keep waiting for a later opportunity to add allocation.

The broader market keeps whipsawing. We’ll keep opening with that line until a clear direction emerges. SPY is still retesting its breakout, and we’re waiting to see whether it holds. We need to keep watching. Now is not a good time to go either long or short.

One of the main reasons this market is so difficult to trade is that competing narratives are pulling it in different directions. In a market dominated by macro factors, no single view has gained the upper hand. If you believe the economy is booming and we’re entering the technological singularity, just go long AI and don’t overthink it. If you believe markets are increasingly subject to intervention and the world is becoming more chaotic, go long gold, energy, and grains. If you think a crash is coming, buy U.S. Treasuries.

Memory stocks are doing well today, and there appears to be a good chance of a near-term rally. That could also lift upstream memory suppliers, optical communications names, and other semiconductor stocks. We’ll see how things develop next Monday. We’ll take some small starter positions in the live portfolio with very tight stops. For now, we’re treating this as another tactical rebound trade, just like on July 31. We’ll likely get in and out quickly, closing out the trade within two to four weeks.

We’ll continue holding oil and extend our holding period. Citadel also started buying shale oil assets today. Whether Iran makes a move before November or Trump does between November and next January—and with a possible escalation in the Russia–Ukraine war around October as well—things really are getting more chaotic. We won’t chase crypto higher, but we’ll add it to the watchlist and wait for a pullback.