Closing Breadth

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A sincere thanks for providing me with this platform today, all week and since 1997.

Also a big booyah and appreciation of the return of the one and only Johnny The Greek to our Comments Section!

Enjoy the long holiday weekend.

Be safe.

I am shorting XLF at $54.07.

Hypothesis creep almost never works in the stock-picking game. The best investments can usually be distilled into three short and simple bullet points. The worst investments occur when the results are not consistent with the original bullet points, yet one rationalizes sticking with the investment by developing a new investment hypothesis.

This almost never ends well.

This is what Gen AI is, nothing is consistent with the original investment hypothesis. It is not scaling, it is not showing a path to AGI, and it is not helping anyone close to the degree it was promised, even when it is being given away at a price that leads the underlying service and infrastructure providers to lose scads of money.

BUT, hypothesis creep has also occurred within the minds of the investment class in the venture community and public company hyperscalers. It has been so bad, it is good. They keep throwing more and more money at what isn’t working right, probably for the same reason a dog licks its balls. These guys clearly all have little ones too, so we have a giant measuring contest going on.

Basically, there is circular hypothesis creep amongst the stock pickers and the hyperscalers and VCs, a reflexive investment boom, the net result being higher electricity prices for everyone, and now this, which is kind of funny.

When you are getting picked on by South Park, even the general public is figuring out this stuff is not working right:

https://brobible.com/culture/article/south-park-changing-chatgpt-opinions/

Breadth

Sectors

Nasdaq 100 Heat Map

Consumer non-durables catch a bid... as market turns lower.

That is my thesis.

Buying (small) MSOS calls in the event rumors of a rescheduling (tonite) are accurate.

Near term, for a week from today, in and out of the money calls.

PS: These "dream shots" rarely are successful but the rumor of a rescheduling today is rampant. But my call buying is at much cheaper prices than my call sales yesterday afternoon.

Not a big commitment.

At $5.27 I am adding back one quarter of the MSOS that I sold at $5.84 late yesterday afternoon.

With S&P cash -43 handles I have covered my SPY $644.78 and QQQ $570.55 shorts.

I have no Index positions on; I plan to reshort on strength.

Upside:

-WOOF +20% (earnings, guidance)

-AMBA +19% (earnings, guidance)

-NEO +19% (court rules for NeoGenomics in patent infringement lawsuit against Natera)

-AFRM +17% (earnings, guidance)

-IREN +16% (expands AI Cloud to 10.9k GPUs, with NVIDIA Preferred Partner Status and Additional Financing Secured)

-ADSK +12% (earnings, guidance)

-DOOO +9.0% (earnings, guidance)

-CELH +6.7% (PepsiCo confirms acquired $585M in newly issued convertible 5% preferred stock in Celsius)

-ESTC +6.7% (earnings, guidance)

-BABA +4.2% (earnings, color)

-UEC +3.6% (strength following Cameco lowered production)

-ULTA +2.8% (earnings, guidance)

-UUUU +2.8% (strength following Cameco lowered production)

-UP +2.4% (enters $50M ATM sales agreement)

-GAP +2.0% (earnings, guidance)

Downside:

-OPAD -17% (files to sell $100M common stock sale under existing shelf)

-MRVL -14% (earnings, guidance)

-DELL -7.0% (earnings, guidance)

-CAT -2.7% (cuts guidance due to tariff impact)

* Wash, rinse, repeat!!!

With S&P futures -24 handles I have moved from medium-sized to small-sized the indices:

* SPY $647.05

* QQQ $574.29

Long weekend ahead!

Bonus — Here are some great links:

Bears Typically Run Wild in September ("Jazzy" Jeff Hirsch)

Staples Collapse, Discretionary Soars 

The AI Revolution in Banking

A Small-Cap in Large-Cap Clothing

U.K. bank stocks are down by nearly five percent amid renewed calls for a windfall tax on bank profits.

There could be some modest collateral damage to U.S. banks today (which I have been shorting).

From The Credit Strategist:

The Fundamental Dilemma of the Modern West

The S&P Short Range Oscillator stands at 2.63% vs. 1.27% — increasing the overbought.

Wolf Street howls about our government's fiscal mess.