Market Briefing For Monday, Oct. 19, 2026

Babies being tossed with the bathwater does describe part of Friday. For sure our zeroing-in on the Ai-datacenter-CapEx concerns relates to issues of debt which are not universal (at least not yet); but took a broad overall toll.

So Nvidia (NVDA) and Micron (MU) are 'not' in situations like Oracle (ORCL) or CoreWeave (CRWV); plus we already had multiple contractions in most all the leading stocks. Sure we'd warned of this concern for several months; and primarily focused on 'new-era' stocks that we viewed (and view) as comparatively 'well-undervalued' as you know. However we also wanted the 'big guys' to stay reasonably together; for a backdrop remaining conducive to not undermining overall market structure.

At the same time given this market 'may' be in the throes of a capitulation, it's almost wasting my breath (or yours) chatting about individual valuable plays; when it's the breadth'of decline that makes Thursday look like a 'fake-out'. It is entirely possible that both days (I thought Friday would be 'up-then test'. or then maybe up; however it had to contend with Oil + weekly-basis options).

So when I hear respected market analysts talking about buying Oil Services and so on, while Oil is high primarily related to the Iran War, that's makes not much sense; because presumably such companies will see lower profits after the war ends; unless they're thinking about specific contracts to rebuild war's damage; and I suppose we could include Venezuelan oil fields in that topic.

Market X-ray: on Thursday S&P broke the 50-Day Moving Average and then bounced; very much as hoped for. Friday was a disappointment nevertheless; in general conformity of trying to flesh-out 'if' the near-term's bottoming or not.

There's no reason to switch out our focus; actually this ongoing semi-calamity kind of rotation affirms the avoidance of holding or chasing the big-caps, while we expected most new-era tickers would look for gains primarily in 2027; thus were reasonably good speculative buys on sell-offs this Fall. However several (if not all) are lower technically, than we're comfortable with; but we're unable to do much about that.. unless one is inclined to add to positions (ah hah).

Also we're aware of tax-based strategies, although it's a bit early to focus on that. (One person bought Ondas (ONDS) at a much higher price, so asked about 'if I felt' it would make sense to take a tax-loss; hoping to buy back after 30 day waiting period that IRS requires. I don't know the answer; and certainly hope ONDS is not at these levels a month hence; but there are no guarantees. In that regard I actually do NOT believe it will be so low unless the entire market not only tanked, but did something worse; or what often feels like World War, in a sense persists, and something very destabilizing happens with midterms.)

There's a reset going-on which I hoped was limited to mega-caps; but broader given the Oil market and the AI CapEx concerns; I broached AI worries long ago ... I did believe everything had to catch a breath; given narrower leadership was tiny, more so than historically. Following along, those 'already creamed' (big and small) got of course turned into 'whipped cream' as one sporty wag mentioned. Well of course flavors of 'whipped cream' often leave a pleasant aftertaste (bitter so far); but lots pending for brave buyers of weakness; those playing for a turnaround; or trading drama as on the agenda in days ahead.

But how much of a turnaround and rebound effort depends on a greater clarity regarding the depth of AI / CapEx challenges. So, like I said, it was a mistake to 'hike' interest rates given the Oil-driven 'cost-push pressures'. I get a sense that Chairman Warsh recognizes that, and they won't repeat that error at the upcoming FOMC Meeting. But not all economists / monetarists agree on this.

Technically... lots of scrambling... S&P above July lows only by a bit. It's Oil and Yields; and it can be prolonged a bit 'or' recover speedily depending on events... mostly Oil and the FOMC 'not' doing anything to worsen things. So I think the excess is 'somewhat' being flushed-out in the big-cap tech tickers; it may be dependent on Earnings delivering; but you need Oil reversing and no more yield hikes, to temper money managers re-balancing into old-school.

Clear rotation in a stressed market; with mixed outlooks, and the psychology pressed even our new-era tickers that are not overpriced; benefit from overall security needs, and so on. Again, the 'Bordello Raid' effect I hope structurally could be avoided, but of course the market will look for low debt (no situations like CoreWeave or Oracle); and good free cash-flow. So several washouts in small-cap land are buying opportunities, but can't prove it nor know it to be the case until we navigate way beyond where jitters are now; possibly extending into midterm elections. (Old Irish expression: 'oy'.)

I also note that almost all the smaller-cap tickers we follow got hit for sure; but ALL were up (several by 5-10%) in late aftermarket Friday trading, from the regular session closes (or more than that from intraday lows). Hard to fathom but might relate to the excessive weekly options trade in some. Don't know.

I also have an idea of what could break Oil and the impasse over war: the Saudis (and I would hate this in a way) could temporarily open the flood gates of Oil production (to the extent those gates aren't damaged ha), dropping Oil prices in a way that 'all' the other producers (including the U.S. and Russia) of course would feel. But maybe that's a 'nuclear Oil option' for Saudi Arabia?

Bottom line: I should add, after listening to Fed Chairman Warsh 'live' with the IMF head (overnight from Bangkok), that it appears he is favoring 'growth without inflation' and unlike his critics infer, seems to grasp that we are indeed in a 'new world' unlike anything he's seen (he was working at the Fed through 3 or 4 preceding Chairmen). Importantly he believes AI (ok SI) can enhance a lot of productivity without increasing prices; in fact may help reduce 'in time'.

Also I got the sense (and agree) that there are many inferences we just don't know, as far as how all this 'intellectual AI' transpires; plus he acknowledged the Fed doesn't always get it right. So sure, part of the jitters relate to known unknowns regarding this 'revolution' (doesn't matter if we like it or not; this is where things are). Besides hearing about 'agentic' restaurant reservations, making it hard for many of us to get a table when we want ... how about this as example of change. Ponder AI 'agents' that ordered Apple (AAPL) DUO iPhones this morning ... faster than a human could; and while the human was still asleep.

In my case this 'human' ordered just one (no carrier-tied; no promotional plan). I used the 'pre-order' so only took 'a single click' on my iPhone once the 'Store' opened online. It processed within 5 seconds and already showed November delivery (first 10 days). I'm too old to care much; but noted that 1 minute later it was late November delivery...2 minutes later December; 20 minutes later for January. (Then they stopped at Jan. 25 as their software isn't set for anything over 3 months I'm hearing.) So, is it just supply limitations (part of it I'm sure); units reserved for store sales (for sure); but I tend to suspect AI somehow is involved with 'multiple-unit' agent purchases.

(A reporter says one on eBay (EBAY) is asking $5000 ... that's ludicrous of course, even for a 2 TB high storage model which never returns more at trade-in by the way.. But nothing quite overrides West Texas Intermediate Oil over $100/bbl.)

When Oil breaks (for whatever reason); we'll find many stocks forming coiled springs ... and sooner or later that likely occurs...one's patience, temperament, desire to 'bet' (because it is a 'bet'). But 'coiled springs' can suffer erosion and metal fatigue if it takes too long; as that's how S&P works its way lower. For a lot of market traders these days, it might be more like 'mental fatigue'. So: it's impossible to divine tail behavior for Oil or CapEx issues (like a CoreWeave; again never assessed it); but the psychology spilled over broadly. 'Rectober'.

This was 'Bordello Raid' week; and the girls briefly tried returning yesterday; but the authorities (Oil and debt worries) ran them off again; but considering history of the oldest profession (as I don't exactly mean tulip bubbles or stock trading) ... that says they'll return. Hopefully soon enough.

Have a relaxing weekend if possible..

Gene