My Palantir Play Explained

Remember when, just about 24 hours ago, I explained why Friday, though a solid day, was not technically a day of reconfirmation of the stock market's bullish trend? Yeah, well... surprise! Monday ended up being such a day. 

The S&P 500 gained 0.36% for the regular session on Monday and posted a seventh consecutive green candle day in the process. The index is due for a pause, so I am looking not to let myself get rattled should there be a couple of "down" days in our near-term future.

The Nasdaq Composite rallied for a gain of 0.71% on Monday. The major indexes were supported by the 23.7% run made by Advanced Micro Devices  (AMD)  in the wake of that firm's deal with OpenAI. Tesla  (TSLA)  was also up 5.5% after that company made an announcement that it would hold a special event later today (Tuesday). Speculation that this special event would involve ties to Archer Aviation  (ACHR)  had that name up 18.1% for the session.

Back to the technical picture. All of the mid-major to major indexes rallied on Monday except for the KBW Banks which have struggled of late and the Dow Industrials, which (don't really count for much anymore and certainly are no longer considered to be a "major") were weighed down by a 5.1% sell-off in Verizon  (VZ)  after it replaced longtime CEO Hans Vestberg with former PayPal  (PYPL)  frontman Daniel Schulman. That said, market-wide breadth was strong on Monday as trading volumes increased. This was the second re-confirmation of bullish trend for the S&P 500 in five days and third such re-confirmation since Sept. 25. No, this is not your granddaddy's stock market. What could possibly go wrong? ​

​Breadth

Just six of the S&P sector SPDR ETFs shaded into the green on Monday, which may seem unspectacular until one really looks at how that performance played out. Technology  (XLK)  took the top spot for the day, up 1.01%, supported by the AMD juiced Philadelphia Semiconductor Index (+2.89%), but the Dow Jones U.S. Software Index was also strong (+1.48%). Growth and Cyclical sector funds took seven of the top eight slots for the day while defensive sector funds, led lower by the REITs  (XLRE)  and Staples  (XLP)  took the bottom three rungs on the daily performance table.

Here's where we really see the confirmation. Winners beat losers by a better than a 3-to-2 margin at both the NYSE and the Nasdaq. Advancing volume took a 68.2% share of composite Nasdaq-listed trade and a 67.9% share of composite NYSE-listed trade. Aggregate trading volume was up 9.2% on day over day basis across Nasdaq-listed securities on Monday and up 5.5% across NYSE-listings. That's minty-fresh! Additionally, as one can see on the chart above, trading volume not only increased across the membership of the S&P 500 but has been notably higher on "up" days than on "down" days for some time now. That's what conviction looks like when driven by professional money.

Shutdown Over? No, Not Yet...

There is still no deal in place that would re-open the federal government. That said, on Monday evening several news sites including those of the Wall Street Journal and Bloomberg News reported that Pres.Trump had expressed an openness to talk to Democrat party leaders about extending healthcare subsidies that could expire at the end of the year.

"We have a negotiation going on right now with the Democrats that could lead to very good things," said Pres. Trump on Monday. "I'd like to see a deal made for great healthcare. Yeah, I want to see great healthcare. I'm a Republican, but I want to see healthcare much more so than the Democrats."

To that statement, Senate Minority Leader Chuck Schumer of NY, responded, "Trump's claim isn't true. But if he's finally ready to work with Democrats, we'll be at the table." 

On that note, Sen. Markwayne Mullin (R) of Oklahoma, said that he has been speaking with both the president and his Democrat party colleagues on healthcare. Is Schumer a party leader in name only? Sounds like it.

House Republicans passed a stopgap continuing resolution in September that would keep the government open that has been rejected repeatedly by Senate Democrats. There has been an impasse in place since last Wednesday. Pressure will continue to build. Democrats want guarantees on subsidized healthcare; some say for those who should be ineligible. Republicans want the government open first and to consider the two items separately.

Either way, with hundreds of thousands of federal employees furloughed and many others continuing to work without pay. There should be visible cracks in consumer spending and economic activity by the middle of October, which would be late next week.

New Records

It's not just stocks. It's alternative assets that are also enjoying this autumn 2025 run for the roses. On Monday, Gold futures traded as high $3,994 and change, and then above $3,999 per ounce overnight. Will Gold crack the $4,000 level on Tuesday? I would not bet against it. That said, are expectations for any coming cycle of easier monetary policy being overdone? Are the benefits of looser regulations and reduced taxes being exaggerated?

I have said that we may have at least one attempt made by the algorithmic trading crowd to shake out the humans in October. That said, I have also written several times that once over that hurdle, the potential is there for a late year melt-up. I know. Paul Tudor Jones said some similar things on CNBC on Monday morning, but we got to that conclusion in different ways, and we were about a month ahead of him (at least publicly) anyway.

Along the investing lines of gold, Bitcoin traded as high as $126,273 per token on Monday and silver futures as high as $48.55 an ounce. Both of those are records as well. Though these alternative investments will do well in an easing cycle, I do see support showing up for the U.S. dollar sporadically throughout the fourth quarter as the probabilities for rate cuts evolve. Though this is likely not a long-term negative for asset prices of this kind, I think it will lead to a more volatile environment which in turn could lead to some profit taking.

Say What?

Readers likely noticed that shares of AppLovin (APP)  took a 14% beating on Monday, which mostly occurred late in the day. The stock is trading another 3% lower overnight as I work. Bloomberg News reported on Monday afternoon that the Securities and Exchange Commission was looking into allegations that the digital ad tech company had violated service agreements with platform partners to send more targeted ads to consumers.

The company did respond to Bloomberg, "We regularly engage with regulators and if we get inquiries we address them in the ordinary course. Material developments, if any, would be disclosed through the appropriate public channels." 

It is important to note that the Securities and Exchange Commission has not accused AppLovin of actually committing any specific violations.

Answering the Mail...

In answer to an emailed question...

- Yes, I added most of the shares of Palantir Technologies  (PLTR)  that I had sold earlier in the Friday session back to the core position later on Friday. That's exactly what I had written that I would both on Twitter and at Doug's Diary if I saw support show up at the stock's 50-day simple moving average. Having a plan... target prices, pivots, add levels, and panic points takes as much emotion out of this game as anything else I know of. Plans like that have sure made me a better trader / investor.

(Tentative) Economics 

(All Times Eastern)

08:55 - Redbook (Weekly): Last 5.9% y/y.

3:00 p.m. - Consumer Credit (Aug): Last $16.01B.

4:30 p.m. - API Oil Inventories (Weekly): Last -3.674M.

The Fed

(All Times Eastern)

10:00 - Speaker: Atlanta Fed Pres. Raphael Bostic.

10:05 - Speaker: Reserve Board Gov. Michelle Bowman.

10:30 - Speaker: Reserve Board Gov. Stephen Miran.

11:30 - Speaker: Minneapolis Fed Pres. Neel Kashkari.

4:05 p.m. - Speaker: Reserve Board Gov. Stephen Miran

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open:  (MKC)  (.82)

At the time of publication, Guilfoyle was long AMD, PLTR equity.