Hey Traders,
On Thursday the Nasdaq dropped $400 billion in about an hour. All it took was one report saying OpenAI’s revenue came in $20 billion lighter than people thought.
I expected a sea of red when I pulled up the rest of the board. Instead, I counted 2,291 stocks moving higher and only 610 moving lower. Whoever dumped the AI buildout didn’t take the cash home, and I wanted to know where it went.
So I spent the week tracking it.
The trail led to a chicken wing chain trading at a price it hasn’t seen in over a month, and to one asset that couldn’t hold a rally no matter what the rest of the market did.
My board sorts every stock by its move divided by its own volatility (so a modest move in a sleepy stock can outrank a big swing in a wild one). This week I added one more flag: anything trading at a price it hasn’t touched in 30 days or more. It doesn’t need to be a 52-week high, just a price the stock hasn’t seen in a month, and that’s where you find the green shoots before anyone writes about them.
The new prices showed up wherever a cash register rings. Visa (V) and Mastercard (MA) hit highs. Hilton (HLT), Marriott (MAR), Walmart (WMT) and Ulta Beauty (ULTA) all traded at prices they hadn’t seen in a month.
Restaurants split cleanly. The franchised value names made new prices, and sellers dumped the company-owned premium names. People are still spending, and investors are paying up for the companies that collect a fee on every swipe while they sell the ones that have to borrow to build.
Then I ran the sort the other way. In a week when Treasuries caught a safety bid (money running to bonds for shelter), I wanted to know what couldn’t hold a rally at all, and the answer was bitcoin.
A Cut of Every Basket
Wingstop came off the new-price sort. It’s trading at a price it hasn’t seen in 35 days, and it’s put in a higher low every day since bottoming at $95.82 on September 25. Citi put it on a 90-day catalyst watch (a flag that the analyst expects a stock-moving event within three months) on October 6, citing its NFL marketing push and the new Wing Pass subscription.
The stock jumped six percent that day and kept climbing. Friday it closed at $122.26, up three percent, right at the high of the day. It’s now above its 21-day and 50-day moving averages (the average closing price over those stretches, a quick read on trend).
Wingstop is a franchisor. It collects a royalty on every order while its franchisees put up the money for the stores. That’s the Visa model one step down the chain, and with investors sorting everything by who has to borrow, I want to own the side that collects.
Sitting Out Every Party
Bitcoin can’t hold a bid. Three times in the last two weeks it tried to push through $87,000, and sellers turned it back every time. Friday it rallied in the morning and gave it all back by the close, which pretty much sums up the week.
The ETF money carried bitcoin all year, and now it’s leaving. About half a billion dollars came out of the bitcoin ETFs on Wednesday and another half billion on Thursday. On top of that, the leveraged longs are getting flushed (traders who borrowed to bet on a rally are getting forced out as prices drop).
That’s the patient money heading for the door, and it hurts more than a few traders fading a bounce. Think about what bitcoin is: no cash flow, no dividend, and more borrowed money behind it than almost anything else people own. When the cost of money drives the market, that’s the first thing people sell.
Plenty of buyers from the August 19 rally are still holding, too, and every one of them is a potential seller. Gold and bonds caught a safety bid this week, and bitcoin sat it out. The Nasdaq bounced, and bitcoin sat that out too, so right now I’m treating it as supply looking for buyers who won’t show up.
Wingstop or bitcoin: which one will the crew pick for Monday’s Ticker Highlight Show? Tap this link to join for whatever rate you want and get Monday’s option trade.
Enjoy the journey,
Tim