Degentrading

EOD recap - 7 Jul 26
Bruising day for momentum with the selling climax in the middle of the day. All high beta sectors were hit regardless of whether they were connected to the semis theme or not.
In memory, $MU and $SNDK ended the day down 5% and 7%. Overall $SNDK defended the 1.5k level listed earlier. $MU traded a tad stronger taking a few looks below 900.
Neoclouds were down across the board by about 10% with $CRWV coming out ahead by being down only 3.5%. Again, this is the second day of a strong performance by $CRWV within the sector.
Towards the later half of the day, $META released it

"Despite those efforts, META is still hungry for even more computing power, the spokesperson said. It is still moving forward with plans for expensive new data centers and recently inked major computing deals with Coreweave, Alphabet, Oracle among others"

"Despite those efforts, META is still hungry for even more computing power, the spokesperson said. It is still moving forward with plans for expensive new data centers and recently inked major computing deals with Coreweave, Alphabet, Oracle among others"

lets keep the capex going

Days like this test your thesis. That said, if you feel sad or under, go out and get some sunlight. Talk to a friend. Eat something nice. Pet your dog.

Why is compute in shortage? How can neoclouds projects be at 2 year paybacks?

mkt thoughts - 6 jul 26
A tale of 2 cities in terms of performance. Names with overweight positioning definitely feeling the gravity today as they sink deeper into the red while the rest of the names in their sectors stage strong rallies. In neoclouds, performance was led by $SHAZ and $IREN on potential anthropic deals. Meanwhile $NBIS floundered while even $CRWV managed to trade firmly. In memory, $SNDK continues to plunge the lows of thursday while $MU is not that far behind. The commonality between these heavy names are their massively overweight positioning and status as retail go to names

$SHAZ is a 2.5B neocloud with 40,000 GB300s that works out to be 2-4B in ARR. A 3 year deal is 6B-12B.

Market Thoughts - 6 Jul 26
SPX got off to a good start off the open. Across momentum, we are seeing some amount of relief rally. However, popular momentum names opened weak even relative to their sector. For example, in neos, $NBIS was underperforming the entire sector, in memory $SNDK was trading extremely heavy as well. While other momo names in their sectors are able to gap up and do a relief rally, the overweight positioning in those names is keeping a lid on them at the moment as weak hands sell into the relief. I would expect this PA to ease off later on.
We also had news that Situationa

This is gonna be unpopular esp for bullish people like me - but the fact that what semi analysis says, has the ability to spook the market - suggests to me that photonics and CPOs have more room to correct

Pre market thoughts - 6 Jul 26
Since the quarterly end rebalancing, yields have inched higher silently with the 10Y at 4.46 and 30y at 4.97. Overnight we had some lacklustre price action in asia markets. As of this writing, KOSPI is down 0.7% while NKY is down 0.3% - both memory markets having retraced some of their huge bounces last friday (~7% on KOSPI, ~5% on NKY).
Over night, it was also leaked that Anthropic was looking to lease up to 1.4GW of compute in australia. First of all, this will have to be done via multiple participants, because there is no singular massive cluster in Australia

The economics of a Neocloud - Why selling compute is like printing cash

The Week Forward - 5 Jul 26
To get prepared for the trading week ahead, i always found it particularly useful to organize my thoughts and to prepare a battle plan prior.
*Recap of Last Week
A quick recap on last week’s price action. We had a huge momentum sell off last week, reaching the most brutal 2day move since Covid. It was not a semis sell off, rather it was a factor sell off ($NVDA held firm while memory puked nearly 20%). In terms of positioning, i believe that most of the crowded longs and “weak hands” have been washed out. For context, pod funds have been implicitly long momentum in

Asia - 3 Jul 26
Post the strong close, all eyes were on KR and the JP market that started trading not too long thereafter. While both $SKHYNIX and $285A had an initial puke - $285A got to the 65k level that i highlighted was strong support in my note yesterday, both of the memory names are now trading much higher, staging an almost 20% bounce from trough to top.
This price action is extremely strong for a number of reasons - first, there are many people who were extremely worried about the leverage in the KR market. However, this episode probably indicates that much of the leverage has already

EOD recap - 2 Jul 26
Overall huge bloodbath in momentum factors today. NDX was down 1.6% with SPX down marginally. However underneath the surface lies a huge sectoral rotation. $AAPL was up 4.64% - just to give you an idea of the sheer amount that semis had to fall to drag the index down.
Looking at momentum factors, this is probably one of the sharpest sell offs in recent history post the dotcom bubble. Momentum as a factor is down about 24% (use your own gauge)
Given that most pods are implicitly long momentum as a factor, i would expect most of them to have been carried out on this move. Ei

This close will be important to watch
Many pods are implicitly long momentum. Given the current drawdown in momentum factor - i think alot of them have been stopped out and will be stopped out soon. Some firms will square off the positions internally, others will try to get it all out by the close.
- posted on my tele first, come into the channel and watch the close if you want

Market update - 2 Jul 26
We probably have about ~24Bn of semis to sell into the close. Some amount (maybe all) would have already been front ran by funds. Given the amount that the momentum factor is down by, i strongly suspect that pods are getting stopped out. Most pods are long momentum factor.
Going into the long wkend, there will be likely risk management stop outs on positions as well. So bear in mind when you see wacky price action.
Tomorrow Korea will be trading. Unless the carnage in $MU and $SNDK stops, i suspect that Korea will be hit pretty hard. $7709 is a trapped whale.
It is al