We just wrapped up a perfect late-summer weekend here in Canton.
Angela and I took Winona for a couple of long walks around the neighborhood, our daughter flew out to California to celebrate her birthday, and I spent part of Saturday doing what I do most Saturdays: catching up on research.
Somewhere in there I also booked a few upcoming trips.
The ticket prices stopped me cold. A quick flight to celebrate a friend’s birthday wound up being a four-figure expense. That got me thinking about energy costs before I even opened my charts. And it turns out energy is just one of several threads running through the market right now that I want to walk through with you.
Here’s what I’m watching this week:
The AI trade facing real scrutiny over capex payback, plus a new NIMBY wrinkle
Memory stocks finding support after their parabolic run and consolidation
Breadth quietly weakening under a market that looks calm on the surface
The Fed’s rate decision Wednesday, and what Warsh does or doesn’t say
Capital rotating into biotech
Energy prices staying elevated, and why that matters beyond the pump
Let’s get into it.
The AI Trade: Capex Doubts and a NIMBY Wildcard
Investors are scrutinizing the hyperscalers hard right now, and the question is simple: Will hundreds of billions of dollars in AI infrastructure spending actually be profitable? That question alone has been enough to put some of the AI “picks and shovels” names under pressure.
Now there’s a second wrinkle showing up: Pushback on where all this infrastructure actually gets built. NIMBY (“not in my backyard”) opposition to new data center projects is becoming a real headline risk, not just a local zoning story.
Combine that with the capex payback question and you get real uncertainty weighing on names that had been market leaders.
I’ll be watching closely to see whether these names find support here or whether capital keeps rotating into other corners of the market. That’s exactly the kind of question a diversified watch list is built to answer, more on that below.
Memory Stocks: The Bullish Side of the AI Trade
Not every AI-adjacent trade is under pressure. Memory stocks ran parabolic to start the year, spent months consolidating that move, and now look like they’re finding support. I think there’s real growth potential left here, and valuations are attractive relative to that growth.
I put my money where my mouth is last week and opened a new position in Micron (MU) in the Speculative Trading Program.
Breadth: A Quiet Warning Sign
Under the surface, breadth has been weakening. The equal-weight S&P 500 has fallen below its short-term 50-day moving average, and the small-cap indices have done the same.
The headline indexes still look calm, but that’s exactly why breadth matters: it’s telling you something the big averages aren’t showing yet.
This is part of why I’m starting to build a bit more bearish exposure in the Speculative Trading Program. When the names holding an index up are doing more of the work while everything underneath softens, that’s a red flag.
The Fed: Wednesday’s Decision
This week the Fed holds its regular meeting on interest rates, and there’s a high probability Chair Warsh moves forward with a hike. Higher rates are a headwind for stocks, but keep in mind investors have already started pricing this in.
The hike itself may end up mattering less than what Warsh says, or doesn’t say, about what comes next.
So far, Warsh has held his cards close to the vest, without much forward guidance to lean on. That makes this meeting more about tone than the headline decision.
I’ll be posting updates throughout the week, and especially right after the Fed’s announcement.
Biotech: Capital Quietly Rotating In
Biotech is showing strong relative strength right now. This is exactly the kind of signal worth watching in a dynamic market like this one.
I’ve got my eye on a handful of names in this sector, and I’ll be doing a deeper dive into a few of them later this week.
Energy: Where Those Plane Tickets Come Back In
Remember those expensive plane tickets?
Higher oil prices are a headwind for growth stocks broadly, and energy is one of the clearest examples right now of limited supply running into demand that isn’t going anywhere.
The Iran war and a drained Strategic Petroleum Reserve have squeezed available supply, even while demand stays strong. Higher energy prices show up everywhere from the inflation numbers down to the price of a plane ticket.
I’m looking to add additional energy exposure over the next week.
So you can see, we’ve got a lot of crosscurrents hitting at once. An AI trade splitting into winners and losers, breadth quietly weakening, a Fed decision that’s as much about tone as the number itself, biotech picking up strength, and energy squeezing tighter.
This is a dynamic market with real opportunity on both the bullish and bearish side.
Comments
Log in or sign up to join the conversation.