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What a week!
AI stocks got smashed.
Earnings "winners" like Meta (META), SpaceX (SPCX), and Bloom Energy (BE) got smashed.
And yes, I got smashed too.
Let's dig in.
Energy Beats AI
AI was the place to be in 2026. Was...
But this week, XLE overtook SMH at the top of our ETF leaderboard:
As you can see, XLE is up 58.1% this year and 12.7% in October.
And you know why: high oil prices because of the US-Iran and Russia-Ukraine conflicts.
Look at how smooth this YTD XLE chart is:
It's almost like the stock market was telling us things would not quiet down any time soon.
AI: Is This As Good As It Gets?
The big question on Wall Street right now is "Why can't AI stocks rally when all the news is good?"
Every 5 minutes, I see another supposedly bullish AI data point. This week, we saw:
-Huge AI-driven earnings from Western Digital (WDC) and Bloom
Energy (BE).
-Massive data center revenue growth from Texas Instruments (TXN)
-Nebius Group (NBIS) said it could sell out its 2027 compute capacity immediately.
But I suspect beneath the surface, the market is asking this question:
"What if this is as good as it gets?"
Because we keep hearing from company after company that they can't meet demand out multiple years.
We all know AI leaders like SanDisk (SNDK) and Lumentum (LITE) will just keep on crushing estimates.
So what's left in the way of positive surprises?
I say this as someone who own plenty of AI stocks including SanDisk, Western Digital, Marvell (MRVL), and even that Godforsaken Cerebras (CBRS).
The good news is, we're about to enter a monster tech earnings week with plenty of AI names reporting.
We'll see if the market is finally ready to reward good news.
Or, if valuations have simply come in enough to attract dip buyers.
Gonna be exciting!
This Is the Super Bowl of Trading!
Don't ask "what's happening next week?"
Ask "what's not happening next week?"
We have the FOMC rate decision, PCE Price Index, and GDP report.
And it's the busiest week of earnings season with giants like SanDisk (SNDK), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Visa (V), GE Vernova (GEV), Intel (INTC), and plenty of other key names reporting.
Analysts are forecasting 29.5% growth for Q3, according to FactSet.
And given how many stocks have been getting hit even after good reports, it feels like expectations are sky-high.
Because everyone's looking for excuses to sell.
As for the AI trade, the market wants two things:
-Across-the-board beats and strong guidance
-Capex increases from the likes of GOOGL, MSFT, AMZN, etc.
This Market Is Short on Joy
The latest AAII Sentiment Survey shows that 36.9% of investors are bullish.
That's in-line with the long-term average of 37.5%.
And it's the third straight week of neutral-ish sentiment.
Plus, CNN's Fear & Greed Index is at just 20/100, indicating Extreme Fear.
So this market is still short on joyous participants.
Though I'm sure you knew that, based on how many stocks are beaten down.
Rate Hike Expectations - Subject to Change, As Always
The next FOMC meeting is October 28, and it looks like a rate hike is off the table, according to the CME's FedWatch Tool.
The market is pricing in a mere 10.5% chance of a 25 bp rate hike, down from 70.9% a month ago.
And the market expects an 78.4% chance of at least one hike by year-end, a slight decline from last week.
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