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Tuesday, May 12, 2026

Did the AI Bubble Just Pop? Black Swan Spotted Overnight

Semiconductors continued to spur the dead horse $SPX (UNCH) market on Monday — with the $SOX touching 12k pinning the investor stupidity meter in the red (fuckwit levels). Latest pump job: $NVTS +30%.

Then came the Black Swan of the year.  Most investors haven't even grasped the full implications... let alone heard the story reported accurately. 

 A top South Korean policymaker on May 12, 2026, proposed a "citizen dividend" paid to citizens funded by taxes on high AI company profits. This proposal, targeting AI-driven gains. Officials later tried to clarify it would apply to "excess tax revenue" rather than a specific new corporate tax", but judging by U.S. futures, the black swan has already flown the coop.

What's to keep the full socialist Mayor of New York City from doing the same thing at the New York Stock Exchange ... and maybe that's why they just built a second NYSE in Texas - another fact most investors are being kept in the dark about.

Another fact you've been left in the dark on is the fact that the semiconductor trade was propagated in Asia as a classic sequential pump job — exactly like we saw in crypto — with the Asian traders running the table.   

A couple blogs back I laid out the two obvious pins that could pop this AI party: Xi holding one, the Fed holding the other. 

"That puts the pin that may burst the AI bubble directly in Chairman Xi’s hand. And with the Middle East cutting off Chinese oil shipments (a blockade — an act of war), it’s a possible black swan. As of today, investors are none too concerned.

The Fed holds the other pin. Higher rates to fight inflation seem unlikely now that Trump's guy is in — but I guess it'll all come out in the Warsh. 😅" [link]

Now S. Korea just dropped a third. And who's to say the new full Socialist Mayor of NYC, doesn't follow suit? Why else would they be building a duplicate $NYSE in Texas?    

 I correctly identified the semiconductor trade as being propagated in Asia - calling it out as a ". Classic sequential pump job, just like we saw in the crypto space - in fact I think Asian traders are running the table." [link], 2 Days Later A S. Korean Black Swan Sends Market Futures Roiling, and now you see the fallout, and the bull contortionists arguing with the tape 

I actually had bullish trades to get to, before the black swan hit the tape - next time. 

Take Care, 

AA

P.S. Bubbles don’t burst in a single day. Even after the top, we’re going to see explosive bear-market rallies. Semis are still a relatively small sector — we’ve got much bigger fish to fry. 

P.P.S. Alternative title for today's blog: How The Guy Who Was Right One Time Became The Poster Child For Perma-Bearish Failure (19th time wrong in a row edition) ðŸ˜‚  

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Sunday, May 10, 2026

Aerospace Trade Finally Pays — Energy + Transports Rotation Loading (Mother’s Day Edition)

It’s funny to hear the folks on CNBC still talking chip valuations (+100X) in 2026 like it means something. Valuations are meaningless. Shorting the $VIX and driving markets ever higher through an endless series of sector rotations (on low vol) is the only game in town. If you’re sharp, you can document it in the charts nearly every single day.
Translation: Don’t trust these moves in the tech space — they’re being driven out of Asia/S. Korea. The same FOOLS who attempt to justify 100X (not a typo) valuations are the same idiots who pointed to stocks trading at “book value” in 2008 like valuation still meant something. Maybe it did at some point in the past… but not anymore.On a positive note: Last week our patience finally paid off in the aerospace sector.
[Before chart - screenshot] 

[After chart] Massive Gap Higher  $DFEN 3X aerospace up 11%. Tests the 50 day sma
I don’t want to see anyone left holding the bag on my watch, so I rang the register ["take it" link].

Speaking of being left holding the bag: Bloomberg continues to point to high oil prices even as Crude Oil enters a bear market. TDS in full view in broad daylight.  

We also took profits in the software space, and home builders [link]. CNBC continues to beat a dead horse after the rally of the past 6 weeks. Here they are over the weekend, still pumping the Software trade,  after it’s already run its course. 


$SKYY (Software/ Cloud ETF) Same Chart I showed you back in April. (was it?). 1. Already had a nice run. 2. Sitting right at resistance. 3. CNBC pump 05/08/2026. 

$SKYY Chart 

Last week’s trade was the culmination of the chip-sector spaghetti I laid out in the previous update: $QCOM → $INTC → $AMD —   The AI Spaghetti Incident Complete w/Side Salad (It’s a Whole Plate Full [link]) That may continue into May Options Expiration. 
Next Trade on the Menu: A pivot back into the Energy sector and the beaten-up Transports (trading at the 50-day SMA). In fact, I see several sector rotations coming up over the summer. Keep looking.

P.S. ProTip: When CNBC talking heads point to the BRAND NEW trading vehicle Roundhill’s latest Semi ETF $DRAM (up 95% over the past 6 weeks), with Friday’s rally juiced on a WSJ report that Intel has made a deal with Apple… your head should already be on a swivel.

P.P.S. My Spidey senses are already tingling. I feel like this is the market’s last hurrah before it gets perpetually dumped going into the mid-terms in November — since market crashes on Trump’s watch have become the new norm. It’s almost as if the market is gas-lighting the American voter with $5 gasoline, while the top 20% enjoy a “k-shaped” economy.


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