The S&P 500 (SPX) closed lower yesterday, although 73% of constituents were higher. A couple of mega-cap names were higher, but not enough to counter the weight of others, including Google (GOOGL), which reportedly is unhappy with the latest version of Gemini and has sent it back to the drawing board.

Nasty Drawdowns

Chips continue to get smashed. It's so bad that they may soon start crying about their orders and say they are declining, not increasing. Seriously, an amazing snapback situation is in the offing, and it will catch everyone off guard, who's spying for an entry point. Keep watching the Nasdaq-100 (NDX) for clues – holding right now at the 50-day moving average.

Proxies

Transportation (IYT) is a great proxy for the U.S. economy, and the IYT made an impressive breakout to a new high on the strength of J.B. Hunt Transport Services’ (JBHT) results.

There are so many people on GLP-1 drugs, and the adjacent health craze, that Abbott Laboratories (ABT) was the number one performer in the entire S&P 500.

Today’s Session

The increase in technology volatility is akin to a ship seesawing back and forth, gaining momentum as each shift creates more panic.

This, coupled with non-stop scuttlebutt that gets more play than actual fundamentals, also adds to volatility.

Now add in the latest headline that China is eating, or will eat, America’s lunch on AI, and you get what we are seeing this morning: China’s Kimi-K3 AI climbed above Claude Fable 5 in AI ranking.  The story is that the platform was developed at a fraction of the cost and proves open source is the way to go. I’ve been studying up on it since 5 a.m., and it looks like more Deep Seek hype.

A system that piggybacks (steals) US frontier models' knowledge and adds a layer, not at a fraction of the cost.  It’s a slow and expensive system, and I’m sure there are additional issues to be unearthed.

The good news is this should continue to stoke a fire under any American competitor. Ultimately, less expensive tokens benefit the hyperscalers and will not diminish the need for advanced chips.  But the script is the same for today.  Lots of fear and confusion.

No doubt this is frustrating, but if you remain poised, you can take advantage of the current wave of selling at some point – soon.