Sounding the "All Clear" - The Real Safety Trade

The Talking Heads Are All Reading From The Same Script Again - no coincidence 

Fast Money (CNBC) after yesterday's closing bell, and Bloomberg Surveillance (this morning) reading from the exact same script re: the flight to safety in big tech". 

Link to actual video segment

1. After they're finished pumping the terrific setup on Financials (earnings next week) (13:05) Fast Money Host  Melisa Lee Asks Guest (from Citi) "Is this playbook into the end of the year (yes she actually gave an EOY window-dressing timeline) going to be to just hideout in technology... I say hideout, in quotes, because it's not necessarily a hideout place for a lot of people, but ...unintelligible, think it is..". 

2. This morning's Bloomberg opening segment: "should investors be hiding out in tech stocks?" 

Translation: - the broadening out pivot is knocking at the door. Snooze you lose. But tech is still great! 

Mag7 stocks continue to trade near the top of the range - not a confirmed breakout. Looks more like a BULL TRAP being laid, ahead of another rotation". Same rotation... https://t.co/kZ4J7M2iPN https://t.co/8tA5FeIU1n

— Veteran Market Timer (@3Xtraders) October 5, 2026 

I suspect most tech junkies don't even know they're hiding out, but with all the negative news about the bond market collapse, $6 diesel, not to mention AI causing 1b deaths - within the next 10 years (even AI will tell you that's science fiction), then you know why some investors are hiding in the most well capitalized companies, just as they did during covid.      

Call it what you want (hiding place) it's the same rotation that's been working since covid - and the same comparison I've been highlighting for months. 

"A magic act so clever that most retail investors don't even notice.... but I cut though that mirage on Sept.10th [link]:" 

As I always say: There are no coincidences on Wall Street, but yesterday was glaring. 

Brazil suddenly trading at new all time highs. CNBC traders could not contain their laughter. I don't blame them. The newly created $BRZL 3X Brazil Bull ETF was up 40% before lunch. #ChaChing Chart has already been added to the public charts list [linked]  

Not just Brazil

Seeing continued strength in small, and midcaps. A higher recent high in energy stocks, and plenty of dip buying in others. But also seeing the gap on the $VIX faded. Stay nimble

— Veteran Market Timer (@3Xtraders) October 5, 2026

Several sectors are already breaking out, even home builders (rate sensitive) seem to be building a base. 

Giving the all clear in bond markets - at least for the next few weeks - ahead of the next FOMC meeting. 

@CNBC And just like that, no more bond panic 🤷 #Treasuries

— Veteran Market Timer (@3Xtraders) October 6, 2026

Yesterday, I was pointing to a $VIX gapping higher on a Monday morning surprise, and this morning, I'm sounding the "all clear". In hindsight yesterday's pop on the $VIX was only an excuse to fill the gap that was left behind on Oct. 17th, and to shake out a few more weak hands.    

I'm actually 75/25 invested in bonds, because I'm expecting some air to come out of the safety trade, here (in the States) and abroad. That sets the stage for a rotation back into the real safety trade, US Treasuries. 

Markets Continue to Trade In Limbo - Time to Regroup

Time to regroup, after a 4 day break - felt more like 2 weeks:  

Treasuries remain stuck in the mud. I may pull the plug on that trade, and wait for a deeper correction, if we don't see short covering in the bond market - this week. I think we could see a deeper correction in equities markets as well - even in the big banks - when they report - next week.   

Small & midcaps rallied on Friday, but the machines are still selling the 20 day SMA. 

$VIX is higher this morning  - that's glaring - after headlines scream, "new intraday highs on the NASDAQ". Intraday highs on a Friday are not bullish. Feels like a repeat of  the week before - a Friday short covering rally. 

$COMPQ (60 min. chart view) Looks more like a retest of the same levels we've been watching for the past several weeks - not a clean breakout. 

This harkens back to my recent Sept. 21st  blog: 

...Buy Yom Kippur", is Still In Play - But The Wrong Sectors Are Leading 

Spoiler: The wrong sector that's leading is the same Mag7 + AI stocks that have been balancing the $SPX on the head of a pin, all year. Last weeks 20% short squeeze in Accenture $ACN doesn't change that.  

Possible catalyst for a much needed correction in the bloated AI sector:  

Today's AI hearing - scheduled for 11:00 AM EST NYC - to be streamed live:   

Former Anthropic researcher Coxon to testify at New York City AI hearing, Bloomberg News reports 

Oct 4 (Reuters) - Former Anthropic researcher Jacob Coxon will testify at a ​New York City hearing ‌on artificial intelligence, Bloomberg News reported on Sunday, citing people ​familiar with the ​matter.

Coxon will appear at the ⁠request of New York ​City Council Speaker Julie Menin, ​who has urged AI whistleblowers to testify as city lawmakers weigh ​a package of bills ​aimed at establishing safeguards around the ‌technology, ⁠the report said. (Reuters)

The rest of the market may continue to trade in limbo, until the next FOMC announcement (a pause already being telegraphed). 

In the meantime we could also see earnings spur a couple beaten up sectors e.g. financials, energy, even miners. 

I was bullish last week, and even added to our positions in treasuries, and midcaps, but unless we see a breakout in the next day or 2, I'm prepared to move to the sidelines - and sit on my hands, until I see a sustainable reversal - rather than the typical Friday short covering.  

Stay nimble