The New Ugliest Chart in the World (Sorry Oracle)
We closed out another fun week in the markets so it's time to look ahead with the 10 things you need to know, starting with…
1. Oracle May No Longer Have the Ugliest Chart in the World
Last week, I said “Oracle Has the Ugliest Chart in the World” and it got uglier this week before a Friday stick-save.
As of Frida morning, Oracle had dropped 39% from its post-earnings high:
BUT… Oracle staged a powerful rally on Friday to end the day green.
Trend change?
Who knows.
But for now, Oracle no longer has the ugliest chart in the world.
Full disclosure: I went long Oracle (ORCL) calls Thursday and got out the same day for a loss. So I completely missed the Friday rebound. My bottom-fishing grade for the week is an F-.
2. But Oracle Has Competition…
The major indices are just a few percentage points off their all-time highs, thanks to stability in the banks plus a few select index superheavyweights like Apple (AAPL).
But below the surface, things are quite nasty, especially for super-speculative growth stocks.
We've extensively covered the boom in low revenue, high valuation stocks like Oklo (OKLO) and IonQ (IONQ).
They are no longer flying high.
Many of these names have fallen more than 50% from their highs, like:
- Bitmine Immersion Technologies (BMNR): -78%
- Trump Media & Technology Group (DJT): -73%
- Rigetti Computing (RGTI): -59%
- D-Wave Quantum (QBTS): -53%
- Oklo (OKLO): -49%
- Pony AI (PONY): -47%
- IONQ (IONQ): -47%
So based on these numbers… BMNR is the ugliest of them all:
3. Expect an Assault on Tom Lee, Owner of the Ugliest Chart in the World
The media loves to build up heroes and then tear them down.
It happened from 2000 to 2022 with Ark Invest's Cathie Wood, who heads up the iconic ARKK ETF.
The knives are about to come out for Fundstrat's Tom Lee, who has been the biggest public face of this equity and crypto bull market.
Lee is Chairman of crypto treasury name Bitmine Immersion Technologies (BMNR), which is cratering:
If this bull market is indeed done, Tom Lee will be the #1 scapegoat for people taking too much risk.
4. Remember Microstrategy
Crypto currencies like Bitcoin and Ethereum have also been taken to the woodshed.
One of the biggest stories of the week was Bitcoin breaking the $100,000 mark with authority.
And as you'd expect, related equities got smashed.
We took a 3-year lookback at Bitcoin vs. the artist formerly known as MicroStrategy – Michael Saylor's Strategy (MSTR):
MicroStrategy, I mean Strategy, used to trade at a massive premium to its underlying Bitcoin holdings.
And as such, Strategy has been playing massive downside catch-up to Bitcoin itself.
No mas.
The love story is over.
5. Fed, Schmed
When Fed Chair Jerome Powell said a December rate cut is not guaranteed, the dovish mood soured fast.
Now the CME's FedWatch tool is pricing in a mere 43.6% chance of a December rate cut.
That's down from 66.9% last week, and 94.4% a month ago.
So if you've wondered why rate-sensitive speculative stocks have been slapped around, this is it.
6. Biotech and Health Care Have RULED
Biotech and Health Care have lagged the major indices for years.
As traders and investors rotated out of tech and high-growth names, biotech and health care have shined in Q4:
Biotech (XBI) is up 16% while Health Care (XLV) popped 12%.
While SPY is barely green.
So Jim Cramer was right. There really is always a bull market somewhere.
7. Sentiment Has Shifted Bearish
The latest AAII Sentiment Survey shows that 31.6% of investors are bullish on stocks for the next 6 months.
This is well below the long-term average of 37.5%.
Meanwhile, bearish sentiment is at 49.1%. Investors have not been this bearish since September 10.
And it makes sense, with all the meltdowns we're seeing.
If things stay weak, sentiment still has plenty of room to deteriorate further.
8. The VIX Is Nowhere Near Extreme
The VIX is up in reaction to the rise in volatility.
But it's nowhere near extreme, like in April when we had the big post-Liberation Day tariff meltdown.
And the VIX isn't even close to the peak in mid-October, when regional bank worries were at the forefront:
9. Apple Is Made of Steel
As noted above, Apple's (AAPL) shocking stability has helped keep the indices elevated.
It's the only Mag 7 stock that's positive in November:
But why?
Well, we're past what was a pretty strong earnings report.
And AI names have been getting trashed.
So Apple's supposed failure in AI is now a benefit.
By the way, Apple is an AI superpower.
Because people can download apps onto their Apple devices. And voilà!
Meanwhile, try telling your kids they have to switch to Android. And see how fast they cry.
10. If Your Account Is Small, Try Options
If your account is on the small side and you're looking to build up to a bigger stake, it's time to consider options.
David Prince of the Inner Circle VTF® explains why: