Yo Pit Crazies,
Fall's arrived in Maine, and I've got pictures. Not of the leaves this time. I did those last week.
These are of a new gate I built for the chicken run. The fox is back and hungry, and I missed my shot at him.
As the chickens settle into colder weather, I can chuck a bale of hay into the trampoline run so they've got something to do. Our protected run was too small, so I built a tunnel out to the trampoline and covered it in chicken wire and some sturdier fencing.
That gave the flock another 120 square feet, plus the tunnel back to the coop. It should keep them from pecking at each other through the long winter.
So far they seem happy, and I didn't want their winter to get worse. The fox is still out there. Things are getting better for the chickens anyway.
Nobody Prices In Boring
A smart guy on FinTwit (the trading crowd on X) asked a question this weekend that I can't shake: what if things just don't get worse?
Can stocks rally hard on that alone? And wouldn't you know it, I got to roll an S&P 500 Trust ETF (SPY) call up in Weekly Profit Cycles for a nice credit (I moved the call to a higher strike and collected money doing it).
I like trading options to take the money. Most of my trouble comes when I don't close.
I don't think people have priced in the idea that things just stop getting worse. The AI trade has been an all-growth story, whatever Chinese bots and knucklehead Congressmen think. Alphabet, Amazon, Microsoft and Meta are on track to spend roughly $725 billion on capital projects this year, most of it on AI build-out.
Then there's Iran. My test for whether the conflict's over has always been oil moving through the Strait of Hormuz.
Tankers are still getting hit, and Tehran says it won't fully reopen the strait until its terms are met. But tracking data from Kpler shows Gulf crude exports beat their prewar pace of about 18 million barrels a day on four days in the last week of September. That's the first time since the war started in February, and to me it counts as things not getting worse.
Rising interest rates are a real problem for Uncle Sam because he borrows too much money. The 30-year Treasury yield hit 5.65 percent last Thursday, a level we haven't seen since 2002. Washington paid $963 billion in net interest through the first 10 months of the fiscal year, about $3.2 billion a day.
Higher rates aren't a huge problem for the private sector. Companies eat the cost or pass it along in higher prices. Right now, demand for dollars to build out AI infrastructure is pretty big, and in this case, demand is good.
I can see SPY at all-time highs sooner rather than later. On Monday, the S&P 500 sat about a third of a percent below its Aug. 13th record close, and I think it keeps making fresh highs into the November midterms.
Waiting in the On-Deck Circle
Right now my Sibyl scanner shows 150 stocks lined up for a turnaround. That means on deck, not in the batter's box.
Hundreds of stocks are getting battered by interest rates for one reason: fund managers move like a herd, buying growth and selling anything that pays income. As of Friday's close, fewer than a quarter of S&P 500 stocks traded above their 50-day moving average (their average price over the last 50 sessions, a quick read on short-term trend). Only about 45 percent sat above their 200-day.
The equal-weight S&P 500, which counts every stock the same no matter its size, is up about 9.5 percent this year. The regular index is up about 12.8 percent. Ned Davis Research flagged this split last week as a sign the bull market's in its final stretch, but I see a lot of stocks the herd left behind, and that won't last forever.
1 year SPY Chart
Look for my Thursday webinar on this.
Hopefully this was helpful,
Andrew Giovinazzi