I discussed the Black Monday comparisons, CoreWeave, the AI trade, one group that sticks out and is still acting well that could lead, the overall market, my portfolio, and more here: open.substack.com/pub/zastoc…

Over the next week we have FOMC, mega cap tech earnings, midterm elections, and the looming threat of a big military escalation in Iran. The perfect environment to get aggressive and press the gas on new positions.

One of the most bullish seasonal windows in history is coming. Since 1942 the S&P 500 has never posted a negative return from November through June after a midterm election. 21 consecutive winning periods with an average return of +16.6%. If you can preserve your mental and fiscal capital, a potential big window of opportunity is near.

When the Nasdaq finally breaks out of the range it’s been trading in over the last six months, the move will be monstrous. From compression comes expansion.

This entire AI selloff is vibes/sentiment driven. Nothing has fundamentally changed with earnings or the underlying demand for AI. The narrative surrounding the trade has just worsened as a result of the war in Iran. Higher rates and the increasingly difficult borrowing conditions that come with them. Sentiment changes way faster than fundamentals do and when sentiment eventually snaps back, everyone will remember why they were so bullish on the AI trade in the first place.

Sentiment and price action can flip on a dime in this AI crazed market. Probably won’t be long before everyone is bullish again and back in love with the AI story. It’s happened numerous times before and it’ll very likely happen again, they don’t make this game easy.

The AI trade is pretty clearly evolving. Gone are the days of buying anything and watching it go up 20% because it was posted as a bottleneck on X. The market is becoming selective about who actually benefits from AI and who is just riding the narrative and retail fanfare of AI. The easy money in blindly buying anything tied to AI whether that’s compute, power, or data centers appears to be behind us. The next big wave of alpha is going to come from identifying the companies directly benefiting from AI. Not just from a narrative perspective anymore but the raw numbers. The AI trade is likely maturing after we had a few years of mania and the next set of winners will probably look a bit different from the last. Profit, free cash flow, earnings, etc. are going to be more important than ever.

Whoever can bring the most power and compute online while simultaneously generating earnings is going to win. It’s not just about who can spend the most, but who can also scale the fastest without destroying their economics in the process. This is the race of our time.

Elon trying to nuke the entire neocloud complex so $SPCX can scoop up all the contracts and buy out the competition for pennies on the dollar is some killer stuff. The mentality you need to succeed in an emerging industry like this, biggest reason why SpaceX is going to be the biggest and best provider of compute.

I’ve seen this chart posted more times over the last week than I have in all previous years combined. Supposedly we’re somewhere between complacency and anxiety across the AI trade. Interesting how almost everyone seems to agree on exactly where we are in the cycle. It’s that easy?

The best time to own a growth stock is when it’s expensive and nobody believes in the thesis. The arguments I’m seeing for why stocks that have already gone on monster runs are suddenly “cheap” explain why so many people are in pain. When these stocks were breaking out and going on massive runs, the masses were calling them expensive and unsustainable. Now after 10-20x moves, suddenly everyone is talking about how cheap they are. The best growth stocks to own are almost always expensive. The best opportunities come when everyone is questioning the thesis and arguing why the growth isn’t sustainable. Not after the stock has gone up 1,000%, and the masses are agreeing it’s an easy buy.

Nobody knows anything but one thing everyone should know is that the market will eventually turn when it’s least expected and sentiment is arguably at its worst. It’s not going to wait for all of the headlines and news to be sunshine and rainbows.

Some of these AI stocks might just go to 0 if the S&P 500 has a routine 10% correction huh, what a mess.

Trying to aggressively trade this market: Stepping into a minefield of Iran headlines, the Kospi nuking every night, commentary from CEOs about why AI is too dangerous, microanalysis about every word said by anyone in the AI space, skittish AI “investors” etc. Paytience.

Imagine if there was a company positioned to win big in AI who had 3.6 billion daily active users, $250B in revenue growing over 25%, and a 42 year old Mount Rushmore founder CEO. Oh that’s $META.

Ken Griffin saw that $SPCX quarter and had to call AI a bubble. Almost like he’s trying to run back the Situational Awareness playbook of blowing up another fund and buying it on the cheap. The timing of Citadel’s warnings and comments is certainly something…

$SPCX is in a league of its own compared to OpenAI and Anthropic. The level of differentiation, competitive advantages, and vertical integration puts it on another planet (pun intended). It’s not particularly close either.

24/7 trading, expanded options trading hours, 0DTE options, leveraged ETFs, prediction markets, and easy access to huge leverage. These are all things designed to help you lose more money, not make more.

If this news about a deal is real (still skeptical) the implications are massive. Lower oil prices, lower inflation expectations, lower yields, lower borrowing costs, etc. The stress in credit markets which has been weighing on the AI trade would start to ease as borrowing costs go down and financial conditions loosen. Deal or bust for the market.

The market wants to exhaust you to the point where you stop paying attention or lose interest entirely. Then when your mental and financial capital are completely drained and you’ve finally had enough, it’ll bottom. This is the game.

Black Monday or not this market stinks, at this point maybe that would’ve been the more entertaining outcome. Imagine trading some of these AI stocks down 30% in one day, this app would be cinema.