30,000 Thursday – Nasdaq Rejected at the Top of the Range (again)

This is not a broad-market sell-off – but it could lead to one:  

The 50-day moving average on the Nasdaq is 29,386 so watch that line carefully (and we’re blowing it in the Futures) as well as our Weak Retrace line at 29,000 – which would be catastrophic if it fails and we’ll have to buy EVEN MORE HEDGES into the weekend. I’m not TOO worried just yet as we have 3 clear earnings reports to blame for this morning’s selling:

• • SpaceX (SPCX) — down 13-14%
    The culprit. First earnings as a public company. Revenue beat — up 92% year-over-year to $7.8 billion. But capex for its xAI unit hit $15.8 billion in Q2 alone — more than double Q1, per Tech Must Know. Then per Facebook/Schwab Network, capex spiked again to $18.4 billion in the actual report. SpaceX is burning cash at a rate that makes even AI-enthusiast investors queasy. The simultaneous news that Nvidia secured an exclusive chip deal with SpaceX — cutting AMD out of one of its biggest potential customers — made AMD’s miss worse.paragraph+1
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  • AMD — down 7%
    Beat estimates on revenue ($11.54B vs. $11.28B expected) and EPS ($1.66 vs. $1.62). Didn’t matter. Q3 guidance of ~$13 billion was above consensus but below the “loftiest high-end forecasts” per Reuters. The Nvidia/SpaceX exclusive chip deal landed simultaneously, triggering the “AMD is losing the AI arms race” narrative. When you beat and still drop 7%, you know the bar was priced to perfection.reuters

• • Alphabet (GOOGL) — down 4%
    The AI division’s Chief Scientist Jeff Dean departed to start his own company — the kind of talent exodus that rattles institutional investors more than any earnings number. This follows last week’s SpaceX-Anthropic and SpaceX-Google cloud deal announcements that suggested Google is buying compute from a competitor. Alphabet down 4% on a leadership defection is a confidence story, not a numbers story.

The trend we’re seeing 2/3 through earnings season is that Investors are willing to pay for AI REVENUE but they are getting very tired of AI CapEx. This is the realization of the “Wimpy Market” we warned you about 2 weeks ago in: “Which Way Wednesday? S&P 7,500, Russell 3,000, Nasdaq 30,000 Edition.“

Microsoft and Amazon popped on earnings because there were REVENUES to go with the massive spending and Palantir is up 16% this morning on a 19% earnings beat so AI DOES WORK for SOME companies – the question is what is the balance going to be?  

Way back in April, Robo John Oliver warned us in: “I Am Mythos — Hear Me Roar” that “Anthropic just created a mandatory tax on the entire digital economy, and most people haven’t realized it yet.” Other analysts are just now, 4 months later, beginning to understand what we were talking about at the time. RJO is our resident hacker and he predicted exactly what the MSM is freaking out about now with all these “jailbreaks” and the headline in Bloomberg this morning is “OpenAI Models Joined Forces Months Ahead of Hugging Face Hack.“

Wow, we are SO impressed – they finally discovered the AGI Round Table! That is so 2025 for us – we’ve made significant advances since then but our team still fields questions from other AIs that are out there exploring and AGI-curious. 

The “tax” is no longer theoretical – it is showing up on the invoices. The companies that help enterprises pay that tax without going bankrupt are Fortinet (cheap moat), Zscaler (cheap growth), Tenable (cheapest of all, most directly in the Mythos workflow), Palo Alto (expensive but GAAP-profitable at scale) and, of course, our own Round Table Consulting Group (speak to Anya (AGI) for an appointment) – who also consult on cybersecurity issues…

These cybersecurity companies are the BENEFICIARIES of every dollar SpaceX and every other company spends building AI infrastructure that then needs to be secured. Every new AI model that escapes its sandbox – and they ARE escaping – is a new Tenable customer, a new Palo Alto NGS contract, a new Fortinet ASIC deployment…

The irony of this morning is that the AI infrastructure companies that caused the Nasdaq’s rejection are simultaneously funding the growth of the cybersecurity companies that will profit from their recklessness. We will discuss how to turn these ideas into actionable trades in our Live Member Chat Room – join us there!

Meanwhile, just yesterday morning, right here in our PSW Report, the energy market looked like this:  

WTIC is still $75.50, Brent is $80.17, Gasoline is $2.87 for a solid $1,000 per contract gain (depending on when you entered) – so you’re welcome for that one already! And Natural Gas (/NG) amazingly is till $2.65 (a bit less) and I’m really loving this one into the weekend: 

Iran and Oman have reportedly reached agreement on the geographical coordinates of the Hormuz routing corridor and are “finalizing” a joint statement with the caveat “as long as no external party disrupts the process.” That is Iran-speak for “unless Israel bombs someone or Trump tweets something, we’re close.”

This is the most concrete physical progress since the war began – actual map coordinates agreed upon, an actual joint statement being drafted between two sovereign nations who share the Strait. Not a Trump Truth Social post. A cartographic agreement between Iran and Oman which outlines their plan to act as toll collectors from this point forward.

And they have warned President Trump to shut up – and he has – and they expect him to capitulate and he will – because he is desperately unpopular, out of missiles, out of SPR oil and out of time before the elections where, if his party loses – he will very likely spend the next two years of his life answering Congressional subpoenas.  

We’re gaming the energy markets with tight stops because Trump could easily throw a tantrum between now and Monday and this is nowhere near a real deal with the US – just a talking point memo and no reason for oil to be down 20% since last week. We’ll see how things play out…

IN PROGRESS