Pre Market Thoughts - 2 Nov 26 Friday's risk off move was the first time the blow up in the AI trade reached into the index with QQQ dropping over 4% for the day, sitting on its 200d ma. I noted that it is not a bad spot to bid the index, particularly if you have a longer term horizon. The semis rebalancing flow itself reached gigantic proportions - over 21B at one point in time - which created opportunities for a fantastic high risk reward trade into the close. I will be sharing about it and how to use Gambit Terminal in a separate post. For this week, we have yet another risk event - which is mid terms. Last week we had the destruction of the mags as investors hiding out in mag7 exposure were brutally delevered. Many of these names sit at the cheapest ever forward P/E ratios. On a longer time frame - this presents a fantastic opportunity to bid this names. The AI trade as many people have noted seems to be "over". On vibes - i agree 100%. Pattern matching with crypto flows - this would be near the right edge of the curve where the blow off has occurred and quiet desperation is setting in. However, many of these names are now also cash rich and starting to devise ways to return/repatriate cash back to shareholders - i believe such measures will have the ability to reignite momentum in the AI trade once again. What are the conditions that will create such a scenario? A deep plunge in the indexes would be one. Pain in 1 sector will not cause easier macro conditions, index level pain however will cause policy panic and government action. Essentially, the whippings will stop once morale improves. This was a phrase that i remember saying to myself in the wake of the May 2021 BTC pop. Prime brokerage data has shown further paring back of positions with purchases in Info tech last week being driven mainly by short covering. Interestingly, triple levered ETFs such as TQQQ and SOXL took in large inflows from retail. We have a situation of retail "buying the dip" while instris are cutting back on already very low exposure. For professional managers, it will be difficult for them to get engaged in the AI trade again this year. Many of them have wrapped up their books after a fantastic 1H and are not taking risk. Prefering to preserve their performance and earn their fees. As such i would expect the next buyers for AI over the next 2 months to be company buybacks (memory) and retail. Flow wise - for tradfi and high beta AI stocks - i would expect very strong performance today as HFs derisk shorts into the mid terms tomorrow. Friday's selling was also a clearing event for many of these names. On Crypto - While BTC has been extremely strong in the context of a hack - either bid momentum or bid value. Good luck!