MarketSurge powers the charts in this video.
AI stocks are back in under-pressure mode. The market might be discounting tighter regulations if there’s a power change in the Senate and the House after the midterm elections. In addition, OpenAI’s leaked revenue is well below estimates, which has likely led some investors to reconsider their allocations to AI-related stocks for now. The semiconductor ETF, SMH, pulled back to its 20-day EMA around 600. If it is going to bounce, this is a great level. Losing it would likely lead to a test of its 50-day moving average around 580.
If you ignore the elevated volatility in anything AI-related, the situation is not dramatic. SPY and QQQ are consolidating near their all-time highs. Crude oil and rates are pulling back slightly. Small caps (IWM) are trying to stabilize near their 200-day moving average.
Meanwhile, capital rotated into software. IGV is still about flat year-to-date, but it has been making higher lows and consolidating near its 52-week highs. Cybersecurity stocks continue to be the leaders in software – CRWD, OKTA, PANW, NET, CIBR, etc.
Brazil had a huge gap after its elections. Similarly to what happened to Argentina a few years ago when Milei was elected, the financial markets tend to react favorably when a more capital-friendly candidate wins. Brazil’s elections are not over. They have a second tour in a couple of weeks, and if there is a surprise, those gaps will be quickly reversed. So far, the leaders in this space are XP, STNE, NU, PAGS, PBR, etc.
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