The AI Trade Fades, But Rotations Hold The Market Together

The AI trade is fading. Big tech got pummeled this week. Not even Micron (MU) could save the semiconductors.

That kind of damage should have cracked the whole market. It held instead. Rotation is the only reason why.

I call it musical chairs. Money fled tech and rushed into financials, healthcare, retail, and utilities. That shuffle kept the advance decline line positive while the index quietly bled.

The market is still slipping underneath all that movement. We dropped 120 to 140 points on the S&P 500 (SPY) this week.

This entire week came down to one level. The lower edge of the expected move. We pegged it Wednesday night at 7380. Price traded right there all day Thursday and all day Friday.

The expected move is not some pie in the skyline. It is the options market handicapping forward risk with real money. Everyone on the professional side watches it.

Now comes the warning. The VIX will not give you warning shots if this breaks. It already sits in an elevated state. Volatility only explodes when correlation rises.

Below current price there is almost nothing to catch a fall. Crack 7,300 on the S&P 500 and 7,000 sits wide open.

One threat sits offshore. South Korean markets are in serious trouble right now. They hit circuit breakers at 8% and finished down 12% this week.

Sellers stormed back after every bounce. They tripped the circuit breaker a second time. Monday could turn into a Black Monday over there.

There is a small probability this sparks heavy selling across semiconductors. That fire could spread and crush the entire S&P 500 advance decline line.

In today’s update, I broke down every level that matters and the trades that worked:

The S&P 500 rode the lower edge of the expected move all week, pegged at 7380 since Wednesday night.
Semiconductors barfed back hard. The SMH ETF fell from up 80% on the year to up 64%.
My QQQ 0DTE trade opened at $1.47 and closed for $3.00 and $3.70.
My Superfly trades hit on every name. Apple (AAPL) 170%, Google (GOOGL) 118%, Microsoft (MSFT) 154%, Meta (META) 169%.
Next week is a four-day holiday week, yet the expected move is already $121. That tops this full five-day week.