The Shine Is Coming Off AI. The Handful That Dragged the S&P Higher Are Now Pulling It Lower.

Last trading day of October, and the week signs off with more earnings carnage.

All in all a good day and few days trading with the new and existing systems.

Scroll down for the range lows, a pair of risk free butterflies and Bitcoin’s rude awakening.

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Market Snapshot

VIX is jumping a little, and with the moves back and slightly below last week’s sell off low, VIX is not rocketing to the similar high levels. Uncles Dow and Russ remain on the rocking chair porch.

• ES (S&P futures): 7,683, -0.35%. Back under the range floor line.
• NazQuack: 28,925.50, -2.15%. The heaviest of the lot, through its range floor.
• Uncle Dow: 52,576, +0.13%. Green, and in no hurry.
• Uncle Russ: 2,855.7, -0.43%. Barely stirred.
• VIX: 18.24, +6.11%. Lifting, but nowhere near last week’s spike.
• Gold: 4,003.6, -0.74%. Still sliding down the triangle, clinging to $4,000.
• Crude Oil: 103.49, +0.61%. Up off the $100 level again.
• Bitcoin: 77,616, -0.30%. Off the bottom of the overnight drop.

Earnings – The shine is coming off the AI sector.

Shares in companies that spend money on computers fell sharply last night, after it emerged they spend money on computers.

More earnings carnage, and while I don’t typically focus a lot or at all on stocks these days, it’s certainly worth noting that the shine is coming off the AI sector, and the main S&P and Naz indexes reacted sharply after the close and overnight.

For the record, the after-hours and week’s movers (Chartmill, Investopedia, Yahoo Finance): Intel down around 23% on soft Q4 guidance, cash burn and supply constraints; Reddit about 18% on a softer Q4 revenue outlook; Twilio and Roblox around 17% each; ServiceNow 18 to 27% through the week on AI spending concerns; Amazon around 7.5% after hours as its AI infrastructure spend comes under scrutiny; Alphabet more than 10% after missing on core search growth. On the other side, OneSpan up about 23%, CareDx about 15%, Norwegian Cruise Line about 13.5%, Chipotle nearly 9% earlier in the week, and Microsoft about 2.6% on 48% Azure growth.

The main S&P and Naz indexes reacted sharply.

SPX – Will this be the one that breaks the lows?

SPX swing remains bullish on the Tag n Turn, and we should see the market gap lower to the X marks the spot. It’s back to the range lows again, and we have seen this level hold firmly for now multiple months.

Will this be the one that breaks the lows? I’d be cautious of the flips still, and wait for a breakout pullback setup before committing to the bear at that level/zone.

Cautious of the flips still.

RSP – Holding the close from yesterday.

The S&P is down around -70pts as I type this, but if you look at the RSP ETF – the equal weighted ETF, premarket prices are holding the close from yesterday, showing to me that it’s again those handful of stocks that were previously dragging things higher that are now pulling them lower.

Holding the close from yesterday.

Double Dip Swings – Some potential bonus profits.

Given yesterday’s Double Dip Strategy profit lock in, prices can meander around this level and I should be able to capitalise on the risk free butterfly with the short strike at 7665 for some potential bonus profits.

RUT/IWM also locked in a Double Dip profit for a risk free butterfly, short strike at 2800.

Prices can meander around this level.

XLV – Pumping to a little overnight success.

And while I’m talking up the new strategy, a few other trades were taken that I point out inside of the Slack community…

XLV, healthcare, fired off a new shallow dip which is pumping to a little overnight success.

A new shallow dip.

XLE – Moving higher overnight.

XLE, the energy sector, also fired off a shallow dip setup and is moving higher overnight.

Also fired off a shallow dip.

Crude Oil – $104.50 officially dinged.

CL crude oil is turning off the $100 level again and punched to target overnight, $104.50 officially dinged. This leaves the bigger picture with what for the moment is a double top, clearly seen on the point and figure charts and daily charts on the left.

Will it complete, or are we going to see oil push even higher?

Turning off the $100 level again.

Bitcoin – Uptober is not going to happen lol.

Bitcoin fell out of bed overnight.

Uptober has 1 day left on the calendar and has been quietly renamed Octo-bear.

Uptober is not going to happen lol.

And with that said, moving from the 4hr to the more mechanical new Double Dip strategy using options via IBIT is going to be the move I like. The cash has been closed out.

The bull remains open on IBIT, and the Deep Bull setup can be seen on IBIT & BTC cash. As long as price is above $45.50 on or before next Friday, I’ll get paid.

Now this is better, far more in line with how I like to trade.

The 4hr is fine, I was manually looking at the charts and the systems in the form of the 6 money making patterns. I was looking for an options solution too, as I prefer to trade using options. IBIT provided that, and the new strategy performs well on it, so it makes sense to move to options and a more mechanical strategy.

Far more in line with how I like to trade.

Premium Popper – Remained underwater for most of the day.

Sank at the open. Held its breath through lunch. Surfaced at the bell with the treasure.

My second Premium Popper of the week that wasn’t something experimental was yesterday. Remained underwater for most of the day and turned around for a max profit by the closing bell.

Max profit by the closing bell.