Something feels off. The SPY slipped under its 8-day moving average, momentum flipped negative, and even Powell himself admitted valuations are stretched. We’re not at red-alert levels yet, but you can smell the leverage in this tape. When liquidity rules, moves stretch longer than they should—until they snap.
Key Takeaways
Momentum cracking at the edges
- SPY under the 8-day and FNGD pressing its 20-day. If we see a break toward the 50-day, that’s where shorts get aggressive.
- Semis and financials are flashing weakness too—SOXS, FAZ, and regional banks all leaning lower.
Liquidity warning signs
- Private equity and alt lenders (KKR, FSCO, ARCC) under pressure—classic signals of stress in the plumbing.
- Reverse repo balances and insider buying patterns remain the best tell for when the Fed steps back in.
AI still sucking up the oxygen
- Goldman’s AI basket is worth $29.5 trillion—almost the size of the U.S. economy.
- Alibaba, OpenAI expansions, and semiconductor demand are proof this is still the dominant capital wave.
Trade setups on the board
- ALB: lithium play, selling November 65/60 put spreads with 85% probability of profit.
- Mueller Industries (MLI): momentum name—watch for a retest at 97–96 on the 20-day.
What I’m Watching
The market’s sitting on a knife edge—SPY between the 8- and 20-day, tech leaders stretched, and financials looking shaky. At the same time, AI remains the one unstoppable theme, with China pouring billions into their own stack and U.S. names like Nvidia, Oracle, and Microsoft pulling in flows. I’m watching whether this divergence between liquidity-driven froth and underlying financial weakness widens or snaps back.
This environment isn’t about value or fundamentals—it’s about liquidity, leverage, and momentum. As long as the money’s flowing, assets levitate. But when that liquidity pulse fades, you won’t get much of a warning. Stay patient, stay tactical.
Until next time,
Garrett Baldwin
TheoTRADE