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Navigating the Q3 Earnings TugofWar · The SPY Trader

• 0:00
  Hello everyone and welcome back to the Spy Trader podcast!
• 0:03
  I am your host, Sunny Skies, coming to you bright and early at 6 am on this Sunday, October 18th, 2026, here in the Pacific time zone.
• 0:11
  We have all had our morning coffee, and now it is time to digest what is shaping up to be a total makeorbreak week for the markets.
• 0:18
  We are right in the thick of the Q3 2026 earnings season, and let me tell you, the vibes are a bit of a tugofwar.
• 0:24
  On one side, we have got incredible AI monetization, and on the other, we have those stubborn interest rates that just do not seem to budge.
• 0:32
  Let us look at the big picture for this week of October 19th through the 23rd.
• 0:37
  The Federal Reserve has moved past its inflationfighting phase and is now trying to manage a soft landing.
• 0:43
  Even though inflation is hovering around two point five percent, the labor market is still surprisingly tight.
• 0:49
  Everyone is going to be glued to their screens this Wednesday, October 21st, when the Fed Beige Book comes out.
• 0:55
  If that report shows that regional economies and consumer spending are still resilient, the market might start thinking that those rate cuts we are hoping for in 2027 are going to be few and far between.
• 1:06
  This is putting some real pressure on the bond market.
• 1:09
  If you look at the iShares 20 plus Year Treasury Bond ETF, also known as TLT, volatility is definitely up.
• 1:16
  We need to keep an eye on those 10year yields.
• 1:18
  If they start creeping toward four point five percent, we might see investors jumping out of highmultiple tech stocks and into more valueoriented sectors.
• 1:27
  Speaking of tech, the narrative is changing.
• 1:29
  It is no longer just about who is buying chips.
• 1:33
  Now, investors want to see who is actually making money from AI software.
• 1:37
  We are looking at Microsoft and Salesforce this week for guidance on how many businesses are actually adopting this tech at an enterprise level.
• 1:45
  If you are tracking the XLK or the QQQ, these reports are your North Star.
• 1:50
  Meanwhile, in the world of finance, the Financial Select Sector SPDR Fund, or XLF, is looking interesting.
• 1:57
  JPMorgan Chase had some great results last week, but now the focus moves to the midsized regional banks.
• 2:02
  Higher interest margins are helping them out, but we really need to watch those credit card delinquency rates.
• 2:08
  And do not forget energy!
• 2:09
  Even with the shift toward green energy, supply chain friction means traditional stocks like ExxonMobil, ticker XOM, are still a great hedge in the XLE sector.
• 2:19
  Two big names to watch specifically this week are Tesla and NVIDIA.
• 2:23
  Tesla is expected to report midweek, and everyone is obsessed with their 2026 Level 4 Full SelfDriving subscriptions and the profit margins on the new Model 2.
• 2:33
  This report alone could dictate the direction of the Invesco QQQ Trust.
• 2:37
  Then there is NVIDIA.
• 2:39
  Even though they do not report until next month, watch what server manufacturers like Dell and HP say about Blackwell chip deliveries.
• 2:46
  That commentary is going to move the needle for NVDA stock for sure.
• 2:50
  Now, let us get into the Spy Trader game plan with some specific recommendations.
• 2:55
  For broad market stability, I am looking at the Vanguard S&P 500 ETF, ticker VOO.
• 3:01
  Since the S&P 500 is testing alltime highs right now, and the Magnificent Seven are not moving together like they used to, VOO is a great way to capture growth in the other 493 stocks that are finally seeing margin expansion.
• 3:15
  My recommendation is to hold or accumulate.
• 3:18
  If we get a dip midweek because of some hot inflation data, treat it as a chance to add to your core positions.
• 3:24
  If you are looking for growth and that AI execution play, the Invesco QQQ Trust is your best friend.
• 3:30
  It is the primary vehicle for the AI software trade.
• 3:33
  If Microsoft or Alphabet give us strong cloud growth guidance, the QQQ will likely lead the whole market higher.
• 3:40
  This is a tactical buy in my book.
• 3:42
  If it holds its 50day moving average early this week, a technical breakout could be right around the corner.
• 3:48
  For those of you looking for income and a bit of a hedge, do not sleep on the Financial Select Sector SPDR Fund, or XLF.
• 3:55
  Banks do really well in a plateaued rate environment.
• 3:58
  They are overcapitalized and they are bumping up those dividends.
• 4:02
  JPMorgan is the gold standard, but the XLF gives you that nice broad exposure, including the insurance sector which has seen record premiums this year.
• 4:11
  I am calling this an overweight recommendation.
• 4:13
  It is your defensive growth play if tech earnings start to wobble.
• 4:17
  Finally, we have the safety play.
• 4:19
  Gold has been hitting new highs in 2026, and the SPDR Gold Shares, or GLD, is the way to play it.
• 4:26
  Even with a strong dollar, central banks are diversifying.
• 4:29
  If the Flash PMIs this Friday show a slowdown in manufacturing, people are going to run to GLD.
• 4:35
  I suggest keeping a five percent hedge position here or in the Vanguard Real Estate ETF, ticker VNQ, just to protect yourself against any stagflation surprises in the economic data.
• 4:45
  To wrap things up, the outlook for the coming week is cautiously bullish, but keep an eye on that techheavy tail risk.
• 4:52
  We might see a green start on Monday and Tuesday as everyone gets excited for Tesla and Microsoft.
• 4:57
  But remember, Wednesday's Beige Book could stir the pot.
• 5:00
  If you are a bit too heavy in tech, think about rebalancing into the Vanguard Total Stock Market ETF, ticker VTI.
• 5:07
  Smallcaps have been trying to catch up all year, and that is a theme to watch.
• 5:11
  Most importantly, keep an eye on that US 10year Treasury yield.
• 5:15
  Below four point two five percent?
• 5:17
  We are cruising.
• 5:19
  If it spikes?
• 5:20
  It might be time to move to the sidelines and look at cash or shortterm bonds like BND.
• 5:25
  Thanks for tuning in to Spy Trader.
• 5:27
  I am Sunny Skies, wishing you a profitable week ahead!