With one scripted AI fear narrative after another dominating headlines over the past few weeks, the media's "doom loop" has escalated from bubble warnings to outright disruption panic theater:
This culminated in Thursday's dump session, with under-the-radar carnage in $TRAN (the Transportation sector), the same "dash for trash" play I flagged on February 3 as the climactic broadening pattern—what I call "The Climax of The Broadening Top" [link to that warning call].
$TRAN (Dow Transports) The 20k target was sold ahead of Thursday's Crash, which went mostly unreported, unless you watch Fox Business. Why is that? Transports aren't tech, but they are a leading indicator for the "real economy," and therein lies the reason the story was quickly buried. It doesn't fit the "broadening out" narrative. Also highlights the point that the faster the media spins, the harder it is to keep the wheels from coming off the clown car.
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| $TRAN Chart |
The catalyst for the worst crash we've seen since April? Brace yourself, because it's almost too dumb for words: An overhyped press release from a penny stock formerly known as Singing Machine (karaoke gear) that's now pivoted to "AI logistics expert" Algorhythm Holdings ($RIME).
According to most media outlets an exaggerated press release that came out of a little known penny stock - formerly Singing Machine (Karaoke) turned AI logistics expert crashed the entire $750b Transportation sector. Watch the video below, which features the CEO, being interviewed on Fox Business [link].
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| ALGORHYTHM CEO INTERVIEWED ON FOX BUSINESS |
$RIME ALGORHYTHM HOLDINGS was up +222.22% on a Friday - once word spread
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| Friday Meme Stock $RIME up 222.22% |
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| the fat lady sings image |
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| The fat lady sings image |
Expect more word salad from the msm. Just as the broadening out narrative fails, they can already be seen pivoting back the the diversify away from America. lol
I laugh, because I just watched Bloomberg surveillance do this exact same thing this morning, and you know why? They want America to look like it's failing just in time for the midterms. They must. It's their duty. AI fear has already turned to "recession" fear. That's right, they've already dropped the "r" word.
Look: Only Tech Can Lift the S&P
The dreadfully overbought small-cap rally is likely the next pin to fall, yet European talking heads still peddle the 'broadening out' lie to dodge Trump's America. Bottom line: most of the media silliness (Bloomberg especially) boils down to one thing—Politics.
The Trade Remains Bullish
I'm going to have to hold my nose and buy the tech sector, but there is an easier trade. Financials
This morning Bloomberg surveillance was seen pointing to the recent "5 day selloff in financials", classic fear porn, while ignoring one of the most obvious bullish technical buy signals I've seen in months.
$IYF (Financials) $FAS (3X leveraged financial bull ETF) also in play
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| $XLF Financial ETF chart |
Take Care, AA
P.S. Even on Presidents Day they continued to push the broadening out lie. Bloomberg TV had Ben Laidler on saying US tech stock value has been "squeezed out"—but listen closely: that's code for tech is now relatively cheap and ready to lead again. The narrative has spread clear across the pond, but traders paying attention know the real story: only tech can lift the SPX when the real economy ($TRAN) starts flashing warnings.
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| Ben Laidler Head of Macro & Equity Strategy at eToro - London |
