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As I explained on ‘Making Money’ yesterday, we are in an environment where superintelligence anxiety meets higher yields and negative sentiment, and the herd stops in its tracks. I’m calling the latest version of angst in the market:

Fund managers are conflicted. They are loaded to the gills in Technology (XLK) stocks, and at the same time:

• 45% say long semiconductors is the most crowded trade
• 23% say tech is the biggest tail risk
• 39% say AI hyperscaler capex is the likeliest source of a credit event
• 45% think tech becomes a bubble in 2027

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Boomerang

Throwing a boomerang requires technique, whereas the kind of boomerang session we saw in the market requires excessive selling with no (fundamental) news or developments to justify it.

Tech finished lower but well off the lows, and software continues to break free of AI doom.

There were solid gains across all factors except momentum.

NASDAQ

It was an impressive rebound, and the NASDAQ closed near the session high.

Semiconductor names struggled the most, but everything finished off the lows.

Small Caps

With yields pulling back, small caps finally caught a break.

Although the Russell 1000 Value (IWD) is back above key moving averages and near an all-time high, it has performed poorly against the S&P 500 and NASDAQ Composite.

That could change if the ten-year slips under 5.0%; many bottom fishers will be looking.

Keep an eye on money flows.

Heat Map

Broad Market

There was a sharp improvement in breadth, but still a mountain of new lows.

The market is oversold; please try not to panic and be opportunistic. This is what we live for: chances to catch fire sales.

Today’s Session

Most major indices are marginally in the green heading into the open, with the exception of the Nasdaq.

Last night, Tesla (TSLA) unveiled its next-generation Roadster at a SpaceX (SPCX) test site in Texas, where the car used cold-gas thrusters developed with SpaceX to launch off a ramp, flip midair, and land, and also hit 60 mph in 0.81 seconds. Elon Musk said production is slated to begin in 2028.

On the AI front, NVIDIA (NVDA) expanded its Nemotron 3.5 family of open models with Super VL, a 120-billion-parameter multimodal model built for enterprise AI agents, and Bolt, which is designed to run agents locally on PCs and laptops. Salesforce (CRM), CrowdStrike (CRWD), Atlassian (TEAM), and Synopsys (SNPS) are among the platforms integrating the models.

Fed Chair Kevin Warsh declined to signal another rate hike at the October meeting, sending prediction market odds of a Fed hold up to 86%.

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