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Jekyll and Hyde: Navigating Tech Fatigue and the Energy Surge · The SPY Trader

• 0:00
  Hello everyone and welcome back to Spy Trader , the show where we try to make sense of the market without losing our lunch .
• 0:07
  I am your host , Benny Buckets , and it is currently twothirty pm on Thursday , October eighth , twentytwentysix , here on the Pacific coast .
• 0:16
  We have a lot to unpack today because the market is doing a bit of a Jekyll and Hyde routine .
• 0:21
  While the Dow is hanging in there , the tech world is feeling some serious heat , and it is not just from the rising global temperatures .
• 0:30
  Looking at the big picture , we are stuck in this weird lowhire , lowfire economic regime .
• 0:35
  It is like the economy is holding its breath .
• 0:38
  The S&P 500 , or the SPY as we like to call it , slipped about pointfoursix percent today to seven thousand seven hundred sixtysix .
• 0:47
  It is still hovering near those alltime highs , but the momentum is definitely slowing down as inflation starts to broaden out .
• 0:55
  The real story , though , is the Nasdaq .
• 0:59
  The QQQ fell onepointtwofive percent to twentyseven thousand one hundred ninetythree .
• 1:04
  We are seeing some major AI fatigue setting in , and when you combine that with the tenyear Treasury yield hitting fivepointtwoeight percent , which is a twentyfouryear high , you get a recipe for some techsector jitters .
• 1:17
  On the bright side , the Dow Jones , or DIA , actually edged up pointten percent to fiftyone thousand two hundred thirtytwo .
• 1:26
  Investors are rotating into those oldschool value stocks and energyheavy components .
• 1:32
  Speaking of energy , that sector is the star of the show right now .
• 1:36
  Brent Crude is trading north of one hundred and four dollars a barrel because of the ongoing conflict involving Iran and threats to the Strait of Hormuz .
• 1:45
  This has pushed the XLE energy ETF to the top of the leaderboard .
• 1:50
  Meanwhile , tech is struggling .
• 1:53
  The Undervalued Seven , including heavy hitters like Nvidia and Microsoft , are seeing their momentum reverse .
• 2:00
  Universal Display , ticker symbol OLED , dropped over five percent today , which is a bit of a warning sign for the hardware and semiconductor supply chains .
• 2:10
  In the consumer world , we had some mixed signals .
• 2:14
  PepsiCo , ticker PEP , actually outperformed expectations today with earnings of two dollars and thirtyfour cents per share .
• 2:22
  But Nike , NKE , dropped two percent after giving a cautious outlook for twentytwentyseven .
• 2:28
  And if you like coffee and burritos , keep an eye on Starbucks .
• 2:33
  SBUX fell three percent on rumors they might make a bid for Chipotle , which sent CMG surging fourpointfour percent .
• 2:41
  On the macro side , we are calling this the era of Higher for Survival .
• 2:46
  The Federal Reserves September minutes suggest another rate hike might be coming this year because inflation , measured by the August PCE , hit threepointfour percent .
• 2:56
  That is a long way from the twopercent target .
• 2:58
  The labor market is also in a strange spot .
• 3:02
  We only added twentynine thousand jobs in September , but jobless claims are still under two hundred thousand .
• 3:09
  Basically , nobody is getting hired , but nobody is getting fired either .
• 3:15
  Add in the geopolitical tension in the Middle East and the upcoming US Midterm Elections on November third , and you have got a lot of uncertainty adding a risk premium to everything .
• 3:26
  So , what is the game plan for the Spy Trader community ?
• 3:30
  First , let us look at defensive income and inflation protection .
• 3:34
  With gold hitting four thousand one hundred fiftyeight dollars an ounce , it is acting as a primary hedge against the conflict .
• 3:43
  I recommend looking at SPDR Gold Shares , ticker GLD .
• 3:47
  If you want some yield , consider the Vanguard Real Estate ETF , or VNQ .
• 3:52
  It has a threepointeight percent yield and the companies it holds have strong pricing power even when inflation is high .
• 3:58
  For defensive earnings , you cannot go wrong with PepsiCo , PEP , right now .
• 4:03
  Second , let us talk about tactical value .
• 4:06
  As the tech sector corrects , look at the Financial Select Sector SPDR , or XLF .
• 4:13
  Big banks like JPMorgan and Goldman Sachs report earnings on October thirteenth , and these higher rates should boost their net interest margins .
• 4:21
  Also , keep an eye on the Energy Select Sector SPDR , XLE , as long as oil stays above one hundred dollars .
• 4:29
  Finally , for those of you looking at growth , do not catch a falling knife in the tech sector just yet .
• 4:35
  Wait for the tenyear yield to stabilize below fivepointtwo percent before jumping back into the broad tech ETF , XLK .
• 4:44
  However , if you are a longterm investor , the Undervalued Seven , including Nvidia , NVDA , are actually trading at a ten percent discount to their fair value right now .
• 4:54
  You might consider using this dip to accumulate some VTI for broader market exposure to dilute that techspecific risk .
• 5:01
  That is all for this afternoon's update .
• 5:04
  Stay sharp out there , keep an eye on those yields , and I will see you back here in a few hours .
• 5:10
  This has been Benny Buckets for Spy Trader .
• 5:12
  Happy trading !