The Worm Has Turned

NVDA, AI, ORCL, Positioning Update, and Uranium

Hope everyone managed to enjoy a nice weekend after such a wild week.

We spent a lot of time reviewing market positioning, sentiment, and valuation last week in Wednesday’s Better Not Disappoint. Considering the extreme nature of those readings, this market will ultimately require either a lot of time or a lot of downside to properly rinse. Still, with so much circulating around the AI Narrative and initial shakeup in risk, it’s hard not to feel a little lost especially given it’s now November 24th… do we bounce? Do we go for real downside with little relief in order to force a Fed accommodation like 4Q 2018? Will the Fed response be a news failure anyway like rate cuts in late 2007? Do the wiggles even matter considering the extremes we reached in October in positioning, valuation, and market concentration? Is it Risk Off across the board from here, or a fierce rotation similar to what we saw on Friday where NVDA becomes the ultimate funding short for Boomer Value longs as my friend Le Shrub now calls his portfolio? Remember in July 2024 a few weeks before Yenmaggeddon when I walked through scenarios for what things might look like if correlations rose and Dispersion Bros lost control in What the Dispersion Trade Unwind Could Look Like? Will we do a 2.0 and see a +5% Russell, -5% QQQ day during these upcoming holidays amidst an illiquid tape, just so P&L Search & Destroy shakes the tree as PMs try to save their year? After all, the kids want the GI Joe with the kung fu grip for Christmas.

Well, I’m openminded…