maybe i felt inspired by stanley druckenmiller. earlier this morning there was a clip of him circulating on x about how nowadays, with the advent of ai and other things, traders cannot wait to trade with complete information.

“20-30% is all it takes before i put a position on. i’ll figure out the next 70-80% over the next couple of days.”

makes sense. speed is so important in todays market.. which is why it took me about 32 seconds to buy nvda’s dip this morning.

here’s my thought process.

what makes a great trade?

too many traders often mix up what makes a great trade from everything else they’re focused on.

a great trade is when you can stack odds in your favor over an observable time frame and execute for a profit.

that’s it. and that’s what i saw this morning in nvda.

first.. this squeeze in semis wasn’t necessarily out of the blue:

from our state of the market webinar this morning, traders loaded up more shorts in semis last week than they ever have ever in the history of .. ever.

if you read i finally didn’t lose last week, you know that markets don’t just serve underhand pitches to everyone once everyone gets on the same side of the trade.

they routinely screw as many traders over as possible. and that meant shorts getting blown out today. poetic.

secondly.. maybe it’s my cynicism. maybe it’s my contrarianism. maybe i’m just an asshole. i don’t know. but i see nvda gapping down on a news headline that he got honey pot’d by a chinese spy while the rest of the market absolutely rips and.. well, i think it’s just stupid.

i’ve been doing this for almost two decades now. i’ve seen a lot of stupid stuff. i saw a hot dog company rebrand as a blockchain company and 10x its market cap in a week. i saw kodak cameras leak a fake press release about developing a covid vaccine and jump 500% in a day. i’ve seen people bet their entire financial livelihoods on ripple! (too soon?)

but nvda.. the most important company in the world.. in the most important thematic trade on the street.. gapping down nearly double digits? i’m gonna buy first and figure it out second.

i’m not going to sit here and tell you that it’s going to shoot straight back to all-time highs by next week. i have no idea. but the simple fact that it..

• held its 175 level for the 50th time

• worked on filling its gap down

• reports earnings next week

• options chain completely discounted everything rational..

seemed good enough for me. i bought some call debit spreads at a 3:1 reward-to-risk.

if i’m wrong, i’ll lose a couple bucks. but if i’m right, i’ll make three times as much. and that’s good math right there.

you don’t have to be completely comfortable to win

if you aren’t constantly asking yourself why you’re in a trade.. are you actually even trading?

it happens to the best of us. but the best of us understand that feeling uncomfortable when we put a trade on is normal. it’s what we do after the trade that matters more.

do we stick to our process? do we respect our stops? or.. more importantly.. do we let the winners run? all of this can be extremely challenging in a world that constantly shouts tells you how stupid you are.

and believe me. i get emails from readers every week telling me how dumb my trades are. it’s part of the territory. it’s all good.

i put on one other trade today. if you want to know what that is, you can click here to watch the entire youtube video.

if you want to join tti and sit through our live coaching sessions three times per week, i’ll talk your ear off about risk-to-reward, finding opportunity in chaos, and managing your emotions while everyone else loses their god damn minds.

i guarantee you will learn how to find better trades. and hopefully make more money.

lets find opportunity in chaos together

follow the money,

hamilton
founder, the trading initiative

on november 4th, barchart posted this:

everyone rejoice! the democrats won and its time to buy stocks again.

and less than 24 hours later, barchart posted this:

everyone run! the largest tech sell off since march 2020 is upon us.

so which one was it: fear? extreme fear? can markets change that fast? and should we as traders take action on the schizophrenic nature of the market?

of course, yes. but can it really be as easy as a fear & greed index?

probably not. that won’t stop people from making stupid decisions because of it though.

in other news, my wife and kids put up the christmas tree this week. is that crazy too?

ho, ho, ho! stocks are on the verge of a new bear market.. which tends to be the best time of the year to buy. worked in 2023, worked in 2024, worked in 2025.

and if you keep your head on right, the trades you enter over the next 2 weeks will pay the amex bill in january. good luck.

what you may have missed this week

no one wants to own the stuff going up: financial institutions are betting on a renewed escalation in the iranian conflict.

its time to freak out and sell everything: betting against politics has traditionally been the winning bet.

i lose all the time: losers make more money over time.. and the math backs it up.

When the VIX Hits 36, I Start Looking to Buy: the vix gets clicks. it also pays to buy when people are freaking out.

follow the money,

hamilton
founder, The Trading Initiative

but there’s another question worth asking: what happened the last time the market looked like this?

that’s where randy comes in.

randy is the guy behind randy’s daily print, where he digs into market history, statistics, and the patterns that most traders probably aren’t paying enough attention to.

we’re swapping newsletters today so you get a different perspective from someone who spends just as much time obsessing over this stuff as i do.

here’s randy.

hamilton

There are a thousand different things you can look at when it comes to assessing the market.

Maybe a little bit more than a thousand.

But, over time, I’ve figured out that less is more.

See I’d much rather have a few tried and true indicators that work instead of hundred of them that are hit or miss.

The VIX is one of those indicators that I constantly rely on.

First, what even is it?

The VIX index tracks how much the S&P 500 is expected to move over the next 30 days. Some people refer to it as the “fear gauge” or “fear index” because it usually jumps when stocks fall.

We can see that visually just by looking at the two indexes over time:

But we can also see it by looking at the relationship between daily moves in the VIX and S&P 500:

When VIX goes up, stocks go down and vice versa.

Now it doesn’t happen all the time. The correlation of daily S&P and VIX moves going back to 1990 is -0.70 — not perfectly inverse.

But it happens most of the time and most is good enough for me.

Great, now how do we use it?

There are two ways:

By understanding the volatility regime and how that affects forward S&P 500 returns.

By taking advantage of VIX spikes.

If you like what you’re reading so far, subscribe for free to my Daily Print. I send a 2-3 minute newsletter out every morning with something important for your portfolio to think about.

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Let’s tackle the first one. Volatility likes to move in regimes. In bull markets, you’ll usually see low volatility. In bear markets, you’ll usually see high volatility.

We can see that when we look at the VIX and S&P during the 2022 bear market and coming out of it.

Notice how VIX stayed mostly between 20 and 36:

This was most definitely a high-volatility regime, especially considering the long-term average for the VIX is around 19–20. But as we came out of that bear market and entered a new cyclical bull market, the VIX shifted into a low-volatility regime.

By the way, the lines you see on the chart aren’t support and resistance levels.

They’re statistical levels based on standard deviations.

You’ll notice that these levels sometimes act like what technical analysts would call support or resistance, although I wouldn’t recommend applying basic TA principles to the VIX.

Here are the important levels:

Long-term average is ~19 to 20.

+1 standard deviation is ~27 to 28.

+2 standard deviation is ~35 to 36.

+3 standard deviation is ~43 to 44.

Now, you might be asking: “Why do the higher VIX regimes show higher future returns if high volatility is supposedly bad for stocks?”

Here’s the thing…

There’s a difference between living in a high-volatility regime and experiencing a sudden spike in volatility.

A high VIX tells us the market is pricing in a lot of uncertainty. But when volatility spikes, it can also signal that fear is reaching an extreme.

For example, when VIX closes above the 36 handle, forward S&P 500 returns are very attractive:

And that’s because a VIX of 36 rarely happens near all-time highs.

It happens when…

→ the market is under stress

→ investors are panicking

→ things look flat out ugly

And that brings up a pretty important question: “How do we know if a VIX spike is just a spike or if volatility is entering a new, high-volatility regime?”

Sorry to say this, but I don’t!

A lot of the time, I’ll commit a very small amount of capital on VIX spikes and see how the market reacts. If we see a strong move off the lows, I’m more inclined to believe we’re dealing with a spike in volatility rather than a new high-vol regime.

If we don’t see a strong move, that’s when I think volatility is transitioning.

Of course, this isn’t a perfect process. It’s just how I approach it.

So I look at VIX in two ways:

I’m always watching for volatility to transition into a high-volatility regime. This can be an early sign that the market environment is changing.

I’m looking to buy fear when the VIX spikes to meaningful level (i.e, 36, 44)

There’s honestly a fine line between the two.

But over the years, I’ve found VIX to be extremely useful in understanding market environment.

Are you looking to buy fear when the VIX spikes to historically high levels? Or is this time different? Let me know what you think.

Markets often rhyme,

Randy
Analyst, The Trading Initiative

PS. If you liked the newsletter today, I’m inviting you to subscribe to my free Daily Print.

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I’ll send you one important idea and chart every morning that will make a positive impact to your portfolio. I look forward to talking with you every morning!

if im not mistaken, we’ve had like 5 of those this year. what is the use of using normal distributions in financial markets again..?

and absolutely no one was ready for it they tell me.

wrong.

if there’s one thing i can tell you with 100% certainty, it’s this..

i am not afraid to bail on a thesis if the market changes:

a lot of people forget that trading is not investing. nothing i talk about with clients or online is about how to get rich slow, protect your wealth over the long term, stocks to hold for 12 months, or whatever else the youtube types do.

i am a trader. i trade. i am here to make money. and that means when i feel the heat, i react. because at the end of the day.. you must act in your own self interest. you cannot blow your account. no matter who you piss off through the process.

wednesday’s reaction was a trap

i was open to the fact that the market could have bottomed on wednesday morning.

we were through the midterm elections. the dems had sweeped both chambers. and risk assets reacted sharply to the upside.

but by midday on wednesday, something didn’t feel right.

the high beta, risk-on trade was underperforming the low volatility, risk-off trade.

defensive sectors were being bid. and big money was actively rotating out of semiconductors and the tech sector as a whole.

simply put: the things that wall street should have been buying if the weakness was over were not being bought. they were being sold. and that means you must react to what the market is telling you.

so i shorted the market and alerted the team right before the close.

the biggest wins come when everyone around you calls you crazy

if you stick around long enough, you’ll realize that you’ll normally have 3-4 really big opportunities per year.

these opportunities are there to seriously move the needle on your account. if you can nail them, they negate the relatively large amount of smaller losses you take throughout the year. and they serve as your prime money making opportunity.

yesterday was one of those opportunities:

i added roughly 15% to my trading account. i’m happy. but the jobs not done.

yesterday's trades are in the books. and they do not guarantee anything moving forward.

but yesterday was the short side equivalent to being long energy earlier this year prior to the iranian invasion. i was long XOM. that trade net me nearly 3,000%.

or long memory in april. i was long INTC. that trade net me over 3,000%.

or short the market yesterday. which added 15% to the trading account.

i have to be positioned for the big move. the contrarian move. the move no one wants to take because it goes against what everyone else is yapping about.

trading is hard. this entire year has been hard. but days like yesterday are what move the needle. and i can't afford to miss them.

there will always be another opportunity.. be ready

yesterday’s puke has turned into what appears to be a dead cat bounce in the middle of a steeper sell off.

just check out semiconductors via SMH:

that’s a daily candle printing an inside bar.. a classical candlestick pattern that suggests a slight pause before price resumes in the direction of the trend.

and the trend, at least as of right now, is down.

but i’m not necessarily looking to short anymore. the big move — the meat of the short — is now gone.

everyone loaded up on downside protection. the put to call ratio is over 1. and that means markets tend to be more squeezy to the upside than capitulatory to the downside.

so while i still have some short positions on, i’m mainly looking for the next opportunity to buy the leaders.

maybe that’s next week. maybe it’s next month. i have no idea.

i’m open to the v-shaped recovery like we saw in april 2025 and july 2024. both markets puked big on news, shook everyone out, and then rallied hard over the next six months.

my very best trades come out of those environments. and the conditions are setting up for another one right now.

this newsletter turned into something i didn’t quite expect to write when i started writing it. but hopefully you found value in what i’ve written.

trading is sloppy. markets are hard. and the only thing that matters at the end of the day is your PNL.

want to buy the v-shaped recovery with us? join the community. sit in discord. attend the weekly coaching sessions. and watch the nightly recaps. you will learn how all of this works.

don't buy the dip - buy the rally

could be fun. could be life changing. who knows.

follow the money,

hamilton
founder, the trading initiative

but that doesn’t mean you shouldn’t try. especially if you’re competitive.

the markets are the hardest sport in the world. and unlike my wife’s pickleball league, markets rewards you with a bunch of money when you win.

but winning is really less important than you might think it is.

the goal to making a lot of money in the market is understanding how to make a lot of money when you’re right versus losing a small amount when you’re wrong.

and trust me.. you’re going to be wrong often. unless you’re a fintwit marketer. then you have your fake winning percentage in your bio.

so how can we stack the odds in our favor?

how to make a lot of money while being wrong often

the secret is building a trading process where you don't need to be right very often to make a hell of a lot of money.

so how do you do it? by taking trades that pay you out 4, 5, 6, 12, 100 times the amount that you risk.

for every 1 dollar you risk, aim for (at least) 4 dollars in reward.

your breakeven win rate is 20%. meaning you can lose 4 out of every 5 trades and still not lose any money.

you are now freed from the burden of performance. congratulations!

annie duke in “thinking in bets” says human beings need to win twice as often as they lose in order to feel good..

newsflash: markets don’t care about how you feel. time to man up and learn how this all works.

ready to put this into action?

here’s how i’m going to win 4 dollars for every 1 dollar i’m risking

step 1: identify which sectors and industries wall street is pointing its money printer towards

step 2: find the strongest stocks in those areas

step 3: draw lines on the chart, define your risk, and take the trade

here’s pfizer (PFE):

financial institutions have spent the last two years accumulating shares and this week its breaking out on the back of better-than-expected earnings.

momentum is firing higher, bulls are in control, and a breakout about 30.50 puts PFE into a stage-2 breakout.

using fibonacci extensions as price targets (who said math wasn’t useful after high school??) gives us opportunities to take profits at 36.30 and 45.41.

and we’re using a mix of volatility and price structure to place a stop out at 29.25.

entry: 30.50

stop out: 29.25

take profit(s): 36.30, 45.41

reward-to-risk: 4.62:1

do you get it now?

maybe this trade works. maybe it doesn’t. but the math plays out in my favor over time.

i’m historically a 45% win rate kinda guy. as long as i keep taking 4:1 setups or more, i win. and so can you.

i don’t just talk the talk. i put my money where my mouth is. i own pfe and am following the same trade as i outlined here.

blessed are those who risk their money (and reputation) on a daily basis. amen.

tired of egotistical furus shoving fake winning percentages down your throat? gaslighting you into thinking everything is your fault because you can’t keep up? i hear ya. come lose with our community we’re building. you might even end up making some money in the process.

come lose with me

or don’t. all good. i know how important it is for most people to feel special.

follow the money,

hamilton
founder, the trading initiative

your portfolio should not be anchored around your opinion of whether or not the person in the white house is good or bad. the truth is that markets go up more often than not regardless of who’s in office.

we have the data to support that claim.

but as i get older (approaching my 40s), i’ve come to realize something incredibly valuable..

i can use politics and markets to my advantage: look for the most irrational market takes on social media and simply take the other side of the trade.

because their process is not rooted in facts, stats, history or anything else that we can count and study. it’s based on opinion.

and most people are wrong in markets. often.

here are the facts..

a GOP president with a Dem congress outperforms the market average over the next six months 7/7 times with a median return of 17.3%.

if you add in the fact that the Dems now control both chambers, the median return jump to 18.6%.

why? it probably has to do with the fact that policy changes out of the white house are now effectively gridlocked.

and if there’s one thing you need to understand above everything, it’s this.. the market is a forward discounting machine. and it hates surprises.

wall street can now more effectively price in the future. it’s that simple.

here’s where it gets fun.

yesterday’s losers may end up being the biggest winners

i’m not in the business of predicting what’s going to happen next.

that’s citrini’s lane. at least until he sold to semi analysis earlier this year (great timing btw, literal top).

instead i’m going to do what i always do.. and that’s watch where the flow of money is going.

here’s what wall street has traditionally bought and sold following the midterms:

semis stand out here to me. they historically have done very well over the next six months.

and wall street has beat the high beta ai and semi trade half to death over the last five months.

semis are down nearly 25% from their june highs. and they’re trading below their 200-day moving average right now.

but they’re up premarket. not enough for me to want to buy yet but enough for me to think about what a bottom may look like.

not everything is responding positively though:

while hyperscalers are bouncing the hardest, probably due to the fact that they will slow down incinerating their free cash flow via capex, the ai data center buildout stocks are not.

the ai energy trade has been slaughtered. and they’re down again premarket as Dem governors threaten a moratorium on new construction in key states.

so.. yeah. historically what just occurred is very bullish. but if you think every stock you want to go up in price is going to go up, you’re in for a rude awakening.

as always, the market will punish those who are underprepared and uninformed.

that’s why it’s the perfect time to freak out and sell everything.

for those of you out there who understand the game is greater than which side is in the white house, i encourage you to check out my new Power Shift service.

take my trades. read my reports. sit in our discord. and attend the weekly coaching webinars. you’ll develop a better understanding of how to beat the market by following the money as it shifts from sector to industry, theme to narrative.. as opposed to being a victim of charlatans who let their political opinions get in the way of making money.

click here to follow the money with me

at the end of the day what we do in the markets is a selfish endeavor. unapologetically make as much money as you can. the rest will work itself out.

follow the money,

hamilton
founder, the trading initiative

surprise - nothing has changed.

as of today’s close, XLE has almost doubled the tech sectors (XLK) performance year-to-date:

none of this is new information. and yet for so many traders and investors out there, they’re still looking everywhere else other than the actual thing that continues to win all year.

some people just love to lose money. that’s OK with me. but if you’re reading this, you aren’t one of them.

so what the hell are we going to do about energy right now? can we still buy it here? isn’t the move done?

surprise! the answer may surprise you.

its not overcrowded

most people probably incorrectly assume that with XLE up 52% that the move is over.

i know it’s the first question i ask: how much more can this possibly go?

thankfully.. there are clues we can look for when deciding whether a trend is closer to the end or not.

my number one thing to look at is the flow of funds into etfs.

in case you didn’t know, there are more etfs listed in the market than actual stocks.

some may even call it an etf bubble. and they’re probably right. etfs absolutely dominate everything.

and what started as a retail investment tool has very quickly morphed into financial institutions and large money managers favorite trading vehicle.

instead of betting on individual stocks, they can easily bet on themes, narratives, ideas and groups of stocks.

so when i pulled up XLE to see just how crowded the etf fund flow was.. i was amazed to see that it’s actually slightly negative over the last few weeks.

that’s a good thing for the continuation of the trend, by the way.

side note: almost no one understands how this stuff actually works. i’ve spent the last year studying the in’s and out’s of how capital flowing into and out of etfs can give us edge when trading. and absolutely none of it makes any logical sense. good luck.

what we don’t want to see is a huge spike in etf flow at the same time as price going parabolic. those moves end up as local tops. no buenos.

the second thing i look at is positioning amongst the major players.

are they all taking the same bet on an asset class, sector, or theme? and are they at an extreme?

that’s when trends tend to unwind violently. and once again.. it’s not happening.

large speculators are actually the least long crude since before the iran war.

hell yeah. and guess what i found yesterday?

they try to hide.. but i can find them everytime

i dont just say follow the money.. i do it. and i think you should to.

as i was looking through the possibilities of putting on another energy trade to capture the next sixty days yesterday, i came across a very dedicated buyer on the options chain:

someone on the street pumped around $3.5 million into into the december 18th 67.5/75 call spreads and sold the november 20th 70 calls to finance a portion of it.

they’re making the bet that xle stays below 70 over the next 2.5 weeks and then breaking out into an all-time high into december.

and another dedicated buyer showed up today and pumped a couple million into the december 18th 70 calls while selling the november 68 calls.

if all of this doesn’t make any sense.. that’s ok. all you need to know is someone with deep pockets is betting that XLE is going to keep going up.

and unlike substack or fintwit, these guys have actual money at risk. not just claude summaries of market action after hours.

i don’t think i’m smarter than wall street

when i first got hired on at merrill at the end of the GFC, my manager told me straight out: “i didn’t hire you for your iq. i hired you for your eq.”

that really pissed me off at the time. nearly 20 years later, i realize it was an absolute gift.

the smartest guys in the room are oftentimes the biggest losers in the market. too much brains, not enough shutting the hell up and listening to what the market is actually telling you.

in this case, the market is telling me that energy has more room to run higher. etf fund flows aren’t crowded, positioning isn’t extreme, and there’s some serious money being thrown around on the chain.

so i do what i do best. i just follow along with the money, buy what they buy, and sit.. and wait. it’s worked out well for me over the last decade. i bet it would work it for you as well.

follow the money,

hamilton
founder, the trading initiative

But after looking at a 27-year chart this morning, I’m starting to wonder whether we’re witnessing something much bigger than one incredible year for energy.

Everyone’s still obsessing over the next big AI stock. Semiconductors, software, data centers. The same trades everyone’s been talking about for years.

Meanwhile, energy is absolutely crushing them.

The Leader is Energy

Take a look at the 2026 sector rankings.

Energy is outperforming the S&P 500 by 48% this year. Technology (XLK) has gained 25%.. while consumer discretionary and communications are actually negative.

I couldn’t care less whether social media thinks energy is exciting. It’s outperforming nearly everything else and that’s what matters to me.

But here’s where things get really interesting.

Could This Be Bigger Than 2026?

This is energy relative to the S&P 500 going all the way back to 1999.

After a massive run into 2008, energy spent more than a decade getting absolutely destroyed by the broader market. The ratio bottomed in 2020, rallied into 2022, and has spent the past several years consolidating.

Now look at the right side of that chart.

We’re seeing a broad, rounded formation with relative strength starting to turn higher again.

Could we be looking at the beginning of another secular period of energy outperformance?

I’m not ready to make that call just yet. But I’m sure as hell not ignoring a 27-year chart suggesting another major leadership shift while everyone else is busy chasing technology stocks.

And I already own energy stocks. They’re doing great. Is it time to buy (a lot) more?

What I’m watching: Whether XLE/SPY can reclaim its 2022–23 relative highs. That’s the confirmation I’d want before calling this a new secular leadership trend.

P.S. Anyone can look at energy after a 60% rally and pretend they saw it coming. That's hindsight, not an edge. Inside Hamilton's Power Shift, I'm doing the harder work: identifying the strongest stocks, developing actionable stock and options setups, and following the trades as they unfold. Opinions are free. The work is what matters. If you want to see how I'm identifying and managing those opportunities, take a look at Hamilton's Power Shift.

Hamilton
Founder, The Trading Initiative

• AI’s power infrastructure trade is breaking down.

• Wall Street is abandoning yesterday’s market leaders.

• The entire AI trade could be next.

Everywhere you look.. people are talking about how semiconductors, memory, and neocloud stocks are getting destroyed.

And I get it. They’re some of the biggest winners of this bull market cycle and they’re getting hammered right now.

But while Serenity over on X is serenading his 1 million followers with stories of memory supply being booked out until 2030, something way more important is happening behind the scenes.

The companies response for powering the AI revolution are breaking down.

And guess what. No one is talking about it.

I’m not talking about speculative shit stocks that FinTwit is tweeting about every day. Or your favorite newsletter writer on Substack is pumping to their $30/mo subscription group.

I’m talking about the meat and potatoes of the AI revolution. The long forgotten true bottleneck trade. I’m talking about the companies building the electrical infrastructure that makes the entire AI revolution possible.

Because here’s something everybody seems to forget.. you can’t build a multi trillion dollar economy based around AI without electricity.

And Wall Street is starting to send us a pretty serious warning, folks.

The AI Trade Has a Power Problem

The first stock that caught my attention today wasn’t the continued downside move in semiconductors.

As a matter of fact.. I wrote last week about how the weakness in semiconductors was probably just getting started.. and to buckle up for an extended move to the downside (The Semiconductor Selloff Is Getting Harder to Ignore).

The stock that really stood out this morning was something that you probably have never heard of.. a little known company by the name of GE Vernova (GEV).

You see.. GEV is positioned to be one of the major beneficiaries of the billions of dollars going into power generation and electrical infrastructure.

But look at what’s happening to its stock.

After an enormous push higher after IPOing in 2024, GEV has spent months building what looks like a classic Stage 3 distribution pattern.

And now price is breaking below the neckline.

That’s the exact opposite of what you want to see in a market leader.

A sustained breakdown could introduce a Stage 4 decline.

But here’s where things start to get super interesting..

It’s not just GEV.

I went looking through the rest of the AI energy trade and found the same kind of breakdowns developing across the market.

Just look at VOLT.. an electrification ETF.

This isn’t just GEV having a bad day in a weak market. This is potentially an entire thematic trade within the AI sphere losing its uptrend.

And that’s a very bad thing.

I Always Follow The Money

If you’ve been reading my newsletter for awhile, you already understand what I look for.

I don’t care about what the next revolutionary technology is supposed to be.

I care about where the largest financial institutions are placing their bets.

And right now.. the Capital Footprint across the AI power infrastructure trade is getting ugly.

Take a look at this..

These six stocks represent a majority of the AI energy trade.. and every single one of them has underperformed QQQ over the past 60 trading days.

Five just made new 60 day relative strength lows.

All six are trading below their 50 day relative strength averages.

And the weakness is spreading.. fast.

Eaton (ETN) and Quanta Services (PWR), which were holding up relatively well all things considered, have now joined the breakdown.

Meanwhile.. the utilities sector is outperforming QQQ.

So are broad industrials.

Which means.. in no certain terms.. that Wall Street is not abandoning everything related to energy or infrastructure.

They’re getting the hell out of anything specifically tied to the AI buildout.

This Could Be The Biggest Unwind In The AI Trade

Think about what this means for a second.

The entire AI investment thesis depends on a ridiculous amount of infrastructure spending..

Data centers need a LOT of power.

And power requires generation, transmission, equipment, construction, etc.

The companies expected to benefit from all that spending are breaking down and, at least for now, heading lower.

Does this mean the AI buildout is over? Of course not.

But it does tell me what the largest financial institutions are becoming less willing to own the stocks expected to benefit from it.

And when that happens.. I pay attention. Especially when the entire group of them breaks down.

This really could be one of the biggest warning signs I’ve seen for the AI trade this cycle.

What I’m Watching

As always.. I want to see these breakdowns stick.

If GEV, VOLT and other infrastructure leaders continue falling below their multi month support levels, the odds of a more serious decline across the entire AI trade increases. A lot.

But there’s another possibility.

A sharp reversal back above those broken necklines could create a powerful failed breakdown setup.

From failed moves come fast moves. That’s how I learned it.

And we’ve seen that plenty of times during this bull market.

For now, though, I’m not interested in trying to catch falling knives.

There are still stocks showing strength elsewhere in the market.

And I’d rather follow the money into those leaders than keep buying yesterday’s winners.

That’s a great way to end up posting something like this:

There is no nobility in willingly losing millions of dollars. Leave that shit for the birds.

That’s why I follow the money.

Hamilton
Founder, The Trading Initiative

P.S. Do you think the AI power trade is giving us an early warning about the broader AI market, or is this another buying opportunity? Let me know in the comments.

• Healthcare is emerging as a major market leader.

• AI could fuel healthcare’s next big growth cycle.

• Biotech is leading the charge as money rotates into healthcare.

Most people have absolutely no idea what they’re doing when they talk about the next big winners in the market.

Ask anyone and they’ll tell you what’s going to go 100x next.

Memory stocks. Semiconductor companies. Neoclouds. You name it and they probably own it and are praying they continue to go up.

The problem is that markets are cyclical. And even though many of these trades worked incredibly well in the past.. they might not be the best trade to have on right now.

And that’s what I care about. What do I need to own right now in order to make as much money as I can.

Luckily.. you’re reading this. Because Wall Street is already telling us what the next big AI winner is going to be.

Healthcare.

And it has been for a while.

Since July, healthcare stocks have outperformed the broader market.

I’m not talking about simply holding up better than everything else. I mean actually leading the market higher.

I don’t know anyone talking about this. And that’s fantastic.

The less eyes on it, the better. Because by the time this hits everyones radar, the easy money will be already made.

And if you know anything about how I trade, you know why this matters to me.

I’m here to make the most amount of money I can. Not pick the hardest trades.

So when I see the largest financial institutions buying healthcare stocks.. I simply follow the money.

You Just Gotta Follow The Money

I’m not interested in trying to guess which sector is going to outperform next.

I know I’d probably sell a lot more subscriptions if I lied and said I did.. but after nearly 18 years of trading, I know about 2 people who can confidently tell the future: Stanley Druckenmiller and liars.

Druckenmiller is conveniently long healthcare stocks so I guess there’s a vote of confidence right there.

My process is rooted in watching where capital is flowing from the biggest guys at the top into individual stocks that are emerging as market leaders.

They’re the ones who dictate the next biggest winners. Not me. Not you. The Wall Street giants and professional money managers who have to park trillions of dollars collectively into the market.

And right now the healthcare sector is leaving an incredible Capital Footprint.

But here’s where things get super interesting for me.

Earlier today pointed out during our coaching call that healthcare is also breaking out against the S&P 500 over the long term.

To put this into perspective.. the healthcare sector is classically a defensive sector. When money is rotating into this part of the market, most investors and traders assume the market is going to crash.

The exact opposite is happening right now.

If this is the beginning of a new leadership cycle, we could be looking at something much bigger than anyone can imagine.

We’re potentially witnessing a Power Shift.

A major trend change in the way the markets move.. entirely controlled by the flow of capital from the largest institutions in the world.

And this isn’t just a handful of mega cap healthcare companies either.

Equal weight healthcare (RSPH) is also outperforming the equal weight S&P 500 (RSP).

In other words.. the strength I’m seeing is spreading out across the entire sector. And that’s exactly what I want to see when evaluating whether a change in leadership turns into the next decade of huge winners.

Big Money Is Making BIG BETS On Biotechnology Stocks

There are a number of great looking industries within the healthcare sector.

We went through four of them today during our coaching call with our members.

But one in particular stands out..

Biotechnology.

Some of the best biotech stocks right now were among the first stocks within healthcare to break out to new all time highs.

Here’s the IBB chart trading into all-time highs:

And now we’re seeing strength develop all across the healthcare sector.

By the way.. that’s an important sequence. I hope you remember it.

The leaders always move first. Then I look for evidence that the rest of the sector is following.

And rather than simply buying healthcare through an ETF, my goal is to find the individual stocks that offer the best trading opportunities to make a bunch of money.

Today’s coaching call was all about narrowing down the list of healthcare stocks we want to buy right now.

Here’s a look at our Group-Confirmed Leaders scanner using the TTI Trade Desk:

This scan looks for the strongest stocks within the strongest industries.. ranked using our TTI Score from 100 to 0.

Seven out of the top eight stocks are healthcare. Knock, knock!

I’m on a mission to find the best trades within the best industries within the best sectors.. backed by Wall Streets money. And share them inside of TTI.

What I’m Watching

For now, I want to see healthcare continue outperforming the broader market. That’s the most important part of all of this for me.

A sustained breakdown in relative strength would force me to reconsider this thesis.. although I don’t think it’s going to happen.

And I’ll be paying particularly close attention to the biotech stocks that started breaking out before the rest of the sector.

My goal goal isn’t to chase healthcare once it starts showing up on FinTwit or Substack lol. As a matter of fact, I hope the rest of the newsletter writers stay far, far away from this area for a long time.

My goal is to recognize where the money is going before the normies catches on.

That’s why I follow the money.

Hamilton
Founder, The Trading Initiative

PS. Of the top 8 stocks on the Group-Confirmed Leader scanner.. which one has the best chance to double from here? Let me know in the comments.

Prepared for you by Randy Dunham

October 20, 2026

THE PRINT

Banks may be setting up for a short-term rebound.

THE CHART(S) / DATA

Last week, the State Street SPDR Bank ETF (KBE) underperformed the S&P 500 by -12% over the 50 previous trading days — that’s a statistically meaningful amount.

Here are a few datapoints you should know:

• KBE underperforms the S&P 500 by 0.4% on average over a 50-day period.

• The -1 standard deviation level is -9.7%. The spread fell below this level at the end of September.

• Forward returns have historically favored banks over the following 50 trading days. Banks gained 6.85% on average, compared with 3.11% for the S&P 500. That’s a relative gain of 3.74 percentage points.

Friday’s reading improved to -8.1%, moving back above the -1 standard deviation level, and Monday’s reading held above that threshold.

Although the spread is now above the -1 standard deviation level, it remains close to that threshold and appears to be turning higher.

The KBE vs. S&P 500 ratio is also near levels where we’ve seen relative rallies in banks:

Takeaway: Although banks have been hit hard over the past couple of months, their relative performance makes them interesting on a short-term basis. This could also point to a broader relief rally in rate-sensitive areas that have been hurt by the aggressive move in higher yields.

THE TAPE

THE HIGHS AND LOWS

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• Chips just snapped an eight-day losing streak

• The bounce was narrow: seven of 11 sectors closed lower

• The stocks that can’t hold good news are telling you something

So if you didn’t hear.. chips finally bounced today.

After losing over 15% over eight straight down days. The longest streak for the Philadelphia Semiconductor Index (SOX) since October 2008.

Then today it closed up 1.6%. The NASDAQ jumped over 1%. I’m sure half of Substack is already calling the bottom.

Except me. I’m not. Not yet.

Because the most interesting thing that happened today wasn’t the bounce.

It was the fact that the most important stock right now couldn’t hold it.

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They want you to buy this dip so badly

CoreWeave (CRWV) was at the center of last week’s selloff. Down more than 25% on worries about a debt load of roughly $50 billion.

This morning Goldman upgraded it to Buy. The stock popped about 7%.

By the close? Down 0.4%.

Think about that. The best headline it’s had in months. Arguably the most important investment bank in the world telling you to buy it.

And sellers still used the pop to get out.

Nothing about the company changed between the open and the close. The upgrade was the same at 4:00 as it was at 9:30. The only thing that changed was who was willing to pay up for it.

Meanwhile retail just poured more money into the 3x semiconductor ETF (SOXL) than ever before..

It’s absolute insanity out there. There’s simply no slowdown whatsoever in the amount of money retail traders and investors are willing to throw at this dip.

In great times it works incredibly well. But in bad times it can lead to blowing up accounts.. quickly.

Ask yourself right now what kind of market it feels like. You’re probably not far off.

I care more about the stuff that’s supposed to happen, but doesn’t..

I learned a long time ago that if something in the market is supposed to happen.. and yet the exact opposite happens.. that’s the “oh shit” moment you need to be paying attention to.

It’s a lesson I keep relearning over and over.. and over.

A bounce tells me that sellers are taking a breather. But it doesn’t tell me who the buyers are.

After a flush, the first green day lifts almost everything. Leaders.. laggards.. it’s the days after that reveal the difference.

During a selloff, everybody gets hit. That’s not necessarily information. What matters is who gets hit less.. and who comes back first when the selling stops. That’s relative strength. And it’s how you can pinpoint the next leaders after extreme downside moves.

The stocks I want are the ones that bounce first, bounce the hardest, and hold the bounce. The ones that can’t hold good news are telling you something as well. To stay the hell away.

There’s no award for buying underperforming stocks. Focus on the strongest.

The market is still walking on eggshells

The indexes masked a somewhat weak day today.

Seven of the 11 S&P 500 sectors closed lower. Consumer discretionary (XLY) led, up 2.7%, mostly because Amazon jumped 5% on a Morgan Stanley “top pick” call and Tesla added 3.8%. Tech was up 1.2%. Utilities fell 2%. Real estate fell 1.2%.

And the financial backdrop isn’t exactly very accommodating either. As Randy pointed out this morning in our State of the Market session inside of TTI, the 10-year yield continues to climb to new highs, credit spreads are elevated and the National Financial Conditions Index is climbing once again.

All three of these are typically precursors to a bigger downside move.

So no, I’m not reading today as “all clear, buy the dip!”

I’m reading it as day one of a potential bottom. And that’s all it is.

What I’m Watching Tomorrow

Do I think the chip stocks that retail traders and investors have just YOLO’d into go straight up from here? No.

Bounces after a streak like we’ve seen can be violent in both directions. Meaning tomorrow can be just as bad as today was good.

Here’s what I’m watching:

1. Does the chip bounce hold a second day? One green day after eight red ones is a start. Now show me another one.

2. Who’s leading it? I want to see the names that held up best during the selloff back out in front. That means ASML, NVDA, TSM and more.

3. Is good news getting rewarded? Netflix reports after the close tomorrow. Wednesday night is the big one: Meta, Tesla, Lam Research and Texas Instruments. If good numbers get sold, that tells me more than any upgrade a slimy investment bank says does.

That’s what this week is about. Every night, one piece of how I tell a real leader from a losing stock simply bouncing.

Tomorrow: how I use relative strength during a selloff to find out where the best stocks to own are.

Everybody saw the bounce today. Now ask yourself why it didn’t hold.

Follow the money,

Hamilton
Founder, The Trading Initiative

Archive note: Earlier membership and scanner product descriptions are historical. Existing member benefits and earned credits are unchanged.

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Prepared for you by Randy Dunham

October 19, 2026

THE PRINT

Technology was the only sector to underperform the S&P 500 last week, falling nearly 8% while the index lost about 2%.

THE CHART(S) / DATA

Technology was the clear laggard last week. The sector fell roughly 7.7%, while the S&P 500 declined about 2%.

Every other sector outperformed the index with consumer staples and energy leading the way. We also some some rotation into healthcare and basic materials, each up about 3%.

Market performance is starting to diverge from technology.

Of course, one week doesn’t change a trend, but it’s worth watching tech from here.

A larger trend change must shift on shorter timeframes first!

Takeaway: Technology’s relative weakness is worth watching. Despite being the second-best performing sector YTD (+27.9%), continued underperformance could signal that tech is falling out of favor with the market..

THE TAPE

THE HIGHS AND LOWS

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Material, data, and information in this newsletter are for informational purposes only. This is not tax, legal, or investment advice, and does not constitute a suggestion, solicitation, or offer to buy or sell securities. TTI believes this information is reliable but does not warrant its completeness or accuracy.

• Agentic trading is coming fast

• Automation amplifies your process—for better or worse

• The real edge still comes before the agent

Something happened inside TTI this week that I think is a preview of where trading is going.

One of our members took an intraday strategy we teach, gave the rules to Grok, and had the agent monitor the market for the setup.

It identified the contract.

It defined the stop.

It defined the take-profit level.

It checked the market every five minutes.

And when the setup appeared, he traded it.

He closed the position for nearly $1,000.

The obvious takeaway is:

Wow. AI can trade now.

I think that misses the bigger point.

The bot wasn’t the edge.

The system was.

Automation Makes Everything Faster

I think agentic trading is going to become a normal part of markets.

Instead of sitting in front of six screens waiting for a setup, traders will increasingly have agents watching hundreds of stocks, options chains, market internals and conditions simultaneously.

They’ll monitor. They’ll calculate. They’ll alert.

Eventually, many will execute.

That sounds like an enormous advantage.

And it can be.

But there’s another side to it.

AI can automate a bad trading process just as easily as a good one.

Give an agent bad rules and it doesn’t suddenly make them intelligent.

It simply follows the bad rules faster.

Tell it to chase every breakout and it can chase hundreds of them.

Tell it to average down every time a stock falls 5% and it can systematically destroy an account.

Tell it to trade without knowing where it’s wrong and you haven’t eliminated emotion.

You’ve eliminated the human being who might eventually realize something is wrong.

The future may create incredibly efficient traders.

It is also going to create incredibly efficient ways to lose money.

That’s why I think the value of having an actual process is about to increase—not decrease.

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The Rules Come Before the Robot

The strategy our member automated is what we call the Flush Reversal.

The setup itself is simple.

A major index gets washed out intraday.

But instead of buying because price “looks oversold,” we look underneath the market.

Here it is. Steal it. I don’t care. We have dozens more.

We watch things like:

TICK — Is nearly everything being sold at once?

ADD — Is market breadth still deteriorating, or is it beginning to turn?

VIX — Did fear spike and then begin rolling over?

TRIN — Is volume showing capitulation and then starting to support the bounce?

The trade only happens when those pieces begin agreeing.

That tear sheet is basically an algorithm written in plain English.

And this is already going beyond one experiment.

Another TTI member took the same tear sheet and started turning it into a Pine indicator that changes with the market internals in real time.

It still needs work.

But that’s exactly the point.

A repeatable trading process can be taught to software.

The hard part was never the code.

The hard part was having rules worth coding.

There is a setup. There are confirmation rules. There is an entry. There is an invalidation. There are exit rules.

There are conditions where we explicitly do not trade.

That is exactly the kind of structure an agent can work with.

And that’s why I think the member’s experiment is so interesting.

He didn’t ask Grok:

“Find me a good trade.”

He gave it a repeatable process and asked it to watch for the conditions.

Huge difference.

This Goes Way Beyond Intraday Trading

The same idea applies to the way we swing trade.

Our Market Blueprint tells us where we want to be taking risk.

What is the market doing? Where is leadership? Which sectors and industries are attracting capital?

Then our Hit List works from the bottom up.

Which stocks have the best combination of:

Trend. Relative strength. Momentum.

From there, we still need a setup.

Then an entry. Then a place where we’re wrong. Then position size. Then management.

In other words:

Market Blueprint → Where

Hit List → What

Setup → When

Risk → How much

An agent can eventually help us process all of that much faster.

Imagine an agent watching every stock in the market for our Hit List characteristics while simultaneously monitoring sector leadership, capital flows and the Market Blueprint.

Then it tells us:

“These five stocks are in the strongest areas of the market, meet your leadership criteria, and are now approaching setups that fit your rules.”

That is extremely powerful.

But only because the framework existed first.

The agent does not create the edge.

It scales it.

That’s the part of agentic trading I’m excited about.

Not replacing judgment with AI.

Taking a disciplined process that already works in live markets and giving it the ability to watch more, react faster and miss less.

Because the traders who benefit most from AI probably won’t be the ones with the fanciest agents.

They’ll be the ones who know exactly what they want those agents to do.

Bad process + automation = faster losses.

Good process + automation = leverage.

The technology is changing.

The principles aren’t.

Process first. Agent second.

— Hamilton
Founder, The Trading Initiative

Archive note: Earlier membership and scanner product descriptions are historical. Existing member benefits and earned credits are unchanged.

Get Hamilton’s Inside Track Free for emerging Power Shifts and the research I’m watching next.

Prepared for you by Randy Dunham

October 16, 2026

THE PRINT

The VIX has spent 81% of the past year below its long-term average.

THE CHART(S) / DATA

The CBOE VIX Index (also known as the “fear index”) measures market volatility based on S&P 500 options contracts. The VIX was created in 1990 and it’s become a useful tool for evaluating markets.

Here are a few key points worth knowing:

• The long run average (1990 - present) of the VIX fluctuates between 19 and 20. The latest reading is 19.4265 to be exact.

• The standard deviation around that mean is 8 points.

  • +1 SD is ~27 to 28.

  • +2 SD is ~35 to 36.

  • +3 SD is ~43 to 44.

• A high VIX reading (close above 36) is a great long-term signal for buying stocks. It doesn’t have a perfect win-rate. Volatility spikes in bear markets (like 2008), but they work more often than not. Median 6-month gain on S&P 500 is 19% with an 84% win-rate.

• A below-average VIX has historically been a favorable backdrop for stocks.

The latest VIX reading came in at 16.45:

Over the past year, the VIX has traded below 19 for 81% of the time. Its longest stretch above 19 came in Q1, when the Iran war began.

Historically, S&P 500 returns have been stronger when the VIX trades below its long-term average than when it trades between its average and +1 standard deviation:

Takeaway: The VIX has spent most of the past year below its long-term average. Historically, that has been a favorable backdrop for stocks.

THE TAPE

THE HIGHS AND LOWS

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Material, data, and information in this newsletter are for informational purposes only. This is not tax, legal, or investment advice, and does not constitute a suggestion, solicitation, or offer to buy or sell securities. TTI believes this information is reliable but does not warrant its completeness or accuracy.

• Retail is one of this quarter’s strongest industries

• TGT is building a multi-year base inside that leadership

• The early setup offers dramatically better risk/reward than chasing the breakout

Most traders hear “10:1 reward-to-risk” and assume somebody is either exaggerating or got lucky.

I look at it differently.

Those opportunities exist, but they usually don’t look obvious yet.

The trick is identifying the larger opportunity early enough that your invalidation is still close and the potential upside is still large.

Target is giving us a great live example.

Start With Where the Money Is Going

I don’t start by randomly flipping through stock charts.

First, I want to know where I should be hunting.

Our Market Blueprint framework does that job.

Right now, retail is one of the strongest areas of the market. Quarter-to-date, XRT is the second-best-performing industry ETF in the group I track, up 6.56%.

That matters.

Strong stocks tend to come from strong groups.

And when an industry is outperforming while other parts of the market are struggling, that tells me capital is choosing it.

That doesn’t automatically make Target a buy.. it tells me where to look.

The next question is:

Which stocks inside that area have the structure to produce an asymmetric trade?

That’s where TGT gets interesting.

The Big Setup Is Hiding in Plain Sight

Zoom out.

Target has spent years building what looks like a massive cup-shaped base.

The major resistance level is around $166.50.

That is the obvious breakout.

If TGT clears that level, every 52-week-high scanner in the world is eventually going to see it.

But look closer.

Inside that giant base, price is consolidating in a small descending channel.

In plain English:

The stock had a strong run, stopped going straight up, and has been drifting lower in a controlled way.

That smaller pattern is essentially a bull flag inside the much larger base.

This is where timing becomes important.

If we wait until TGT breaks $166.50, we may get more confirmation.

But we also pay for that confirmation.

The entry gets higher. The stop gets farther away. And the reward-to-risk becomes worse.

The smaller pattern may give us a chance to get involved before the obvious breakout.

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This Is Where the 10:1 Comes From

Here’s the setup I’m working with.

TGT is currently around the mid-$150s.

The bottom of the structure gives us an invalidation near $150.

And the upside reference I’m watching sits around $217.50, near the large open gap from 2022.

Using the trade structure on my chart, the potential reward is roughly 10 times the amount being risked.

That doesn’t mean TGT is guaranteed to reach $217.50.

It absolutely isn’t.

The important point is the asymmetry.

If the flag breaks and the setup works, there is a lot of room above us.

If it fails, I already know approximately where the thesis is wrong.

That’s what I want.

Defined downside. Large potential upside.

And notice why we get that math.

It isn’t because I picked some ridiculous price target.

It’s because we’re looking at the trade before everyone is chasing the breakout.

Why Being Early Matters

Imagine TGT eventually trades through $166.50.

Suddenly the chart looks fantastic.

New highs. Breakout scanners. Momentum traders piling in.

Maybe Substack and FinTwit start talking about Target again.

But anyone who entered from the smaller flag has a very different trade by then.

They already have a profit cushion.

Their original risk was defined much lower.

And instead of deciding whether to chase the breakout, they’re deciding how to manage a winner.

That’s a completely different psychological position.

This is one of the biggest advantages of pattern recognition.

You don’t have to predict what happens.

You identify the structure early enough that the math is favorable if you’re right.

This Is the TTI Process

This is also a good example of how our entire system fits together.

The Market Blueprint tells me where I want to be looking.

Right now, retail deserves attention.

The Hit List helps me figure out what stocks inside those areas have the strongest combination of trend, relative strength and momentum.

Then the chart tells me when there may actually be a trade.

And risk management tells me how much I’m willing to lose if I’m wrong.

So:

Blueprint → Where

Hit List → What

Setup → When

Risk → How much

That’s the process.

TGT still needs to do its part.

I want the flag to break. I want the larger structure to remain intact. And I want the entry to stay close enough to the invalidation that the reward-to-risk remains compelling.

If it does, we may have one of those setups traders often assume only exists in hindsight.

It doesn’t require luck.

It requires seeing the structure before it becomes obvious.

The goal isn’t certainty.

The goal is asymmetry.

Follow the money,

Hamilton
Founder, The Trading Initiative

P.S. — If you want to see how I actually apply this process in real time—where I’m looking, what I’m watching, and the setups I’m willing to risk money on—you can join TTI here:

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Archive note: This dated article preserves its original research and trade discussion. Earlier product descriptions and offers are historical. Hamilton’s Inside Track is free. Existing member access, contractual benefits, earned credits and referral rewards are unchanged.

Prepared for you by Randy Dunham

October 15, 2026

THE PRINT

Equal-weight healthcare is hitting all time highs despite a weak tape.

THE CHART(S) / DATA

Healthcare is not usually the sector that gets people excited. It’s often viewed as a boring, defensive area of the market.

And for many years, that’s been the correct assumption.

But this year has been different. RSPH, the equal-weight healthcare ETF, is up more than 19% year-to-date. Even on a weak tape yesterday, RSPH made new all-time highs.

The RSPH/RSP ratio is also breaking out. It’s currently at levels not since since September 2024:

This could be the start of a long-term trend change for the ratio chart (i.e healthcare outperformance).

Takeaway: Don’t overlook healthcare. RSPH is making new all-time highs and the ratio chart is breaking out. Price is signaling a potential shift toward sustained outperformance.

THE TAPE

THE HIGHS AND LOWS

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Material, data, and information in this newsletter are for informational purposes only. This is not tax, legal, or investment advice, and does not constitute a suggestion, solicitation, or offer to buy or sell securities. TTI believes this information is reliable but does not warrant its completeness or accuracy.

Korea’s stock market is down another 6% as I write tonight.

If you own U.S. tech stocks, this matters even if you’ve never owned a Korean share.

Samsung and SK Hynix are major memory-chip suppliers, and their earlier declines put pressure on a crucial part of the same semiconductor trade many U.S. portfolios depend on.

Owning Micron, Nvidia, and a technology ETF can look like three different positions. But those holdings can share exposure to expectations for AI spending and semiconductor growth. When investors start marking down one part of that trade, I want to check how much risk is tied to the same assumptions elsewhere in the portfolio.

Today’s U.S. semiconductor selloff makes that question more urgent. Below, I’ll walk through the damage, the U.S. tech leaders still holding up, and the signs I’m watching to decide whether this pressure is spreading or an opportunity is starting to develop.

Read more

• The Mag 7 just crossed $25 trillion

• Money is concentrating in large cap leaders

• We’re already positioned.. and hunting for the next trade

Yesterday was an interesting day to be watching technology stocks.

The semiconductor trade was getting hammered. Memory stocks were falling apart. Traders continue to question whether the AI boom had finally gone too far.

Meanwhile, the Magnificent Seven collectively crossed $25 trillion in market capitalization for the first time.

Think about that. Seriously.

One of the market’s hottest trades was getting crushed, yet the biggest companies in America were still attracting buyers.

That’s not a contradiction skimming over. That’s leadership screaming at you in the face.

And it’s exactly what we’ve been watching.

Money Follows Strength

A few weeks ago, I wrote about the Mag 7 reclaiming leadership.

The group was breaking higher in absolute terms and beginning to outperform the broader market again.

My argument was simple: these companies have enough weight to carry the next leg of the bull market, even if everything else isn’t participating.

Now we’re getting more evidence.

In yesterday’s Daily Print, Randy showed how dramatically market leadership has changed since September.

For much of 2026, large cap growth was lagging smaller companies. Following September’s Fed meeting, that relationship began reversing.

Large cap growth moved higher while mid and small cap growth continued struggling.

That tells us where leadership is developing.

But I want to know something else.

Is money actually following it?

Our ETF data says yes.

Over the 20 sessions ending October 12, the Roundhill Magnificent Seven ETF (MAGS) attracted approximately $1.19 billion in net inflows.

Its NAV increased approximately 5.5% over the comparable period.

Meanwhile, SMH - the semiconductor ETF - experienced approximately $832 million in net outflows over its latest 20 sessions.

Those are flows into and out of two specific ETFs, not a complete accounting of institutional positions. But the contrast is worth watching.

Money has been entering the Mag-7 vehicle while leaving the broader semiconductor vehicle.

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This is what I mean by following the capital footprint.

Price is strengthening. Relative leadership is improving. ETF money is moving in.

Wall Street doesn’t have to tell us where it’s putting money.

The footprint is right there.

Get In Before Everyone Says It’s “Safe”

This is why identifying leadership early matters so much.

We’re already long Microsoft and Meta, and both positions have been working very well for us.

We didn’t arrive at those trades because somebody convinced us that AI would change the world.

We found an area of the market regaining leadership, then identified individual stocks offering attractive opportunities.

That’s the difference between having an interesting market opinion and having a trading process.

Our Market Blueprint tells us where we should be concentrating our attention.

Our Hit List helps us identify the strongest stocks within those areas using trend, relative strength and momentum.

Then we wait for a setup where the potential reward justifies the risk.

The Mag 7 was the opportunity. Microsoft and Meta were two ways we chose to participate.

And we’re not finished looking.

Now I’m Looking at Google

GOOG is the next name I’m working through.

That doesn’t mean I’m buying it today.

It means the broader leadership picture has earned it a place on my desk.

Now I want the individual stock to give me an entry, a clear level where the trade would be wrong, and enough potential upside to make taking that risk worthwhile.

It’s the same process we used to identify Microsoft and Meta.

And it’s the same process we’ll use when the memory trade eventually starts recovering.

Because markets don’t move in perfect unison.

Some stocks lead. Others lag. And leadership changes as capital moves from one opportunity to another.

Our job isn’t to own everything that’s going up.

It’s to find the strongest opportunities, enter when the risk makes sense, and stay with the winners as long as the evidence supports them.

The Mag 7 are reminding us why that matters.

While everyone debates whether AI is a bubble, whether technology is too expensive, or whether the next correction is coming, we’re focused on something much simpler.

Where is the money going, and which stocks are benefiting?

Right now, the trail still leads toward America’s largest growth companies.

We’re already participating.

And we’re looking for the next opportunity.

Follow the money. Find the leaders. Ride the trend.

— Hamilton
Founder, The Trading InitiativeGet Hamilton’s Inside Track Free for emerging Power Shifts and the research behind tomorrow’s market leaders.

Archive note: This dated article preserves its original research and trade discussion. Earlier product descriptions and offers are historical. Hamilton’s Inside Track is free. Existing member access, contractual benefits, earned credits and referral rewards are unchanged.

Prepared for you by Randy Dunham

October 14, 2026

THE PRINT

Technology’s relative strength is at an extreme. History suggests the group could lag over the next 50 trading days.

THE CHART(S) / DATA

The chart shows the 50-day return spread between equal-weight technology (RSPT) and the equal-weight S&P 500 (RSP) since 2007.

→ When the red line is above zero, technology has outperformed the broader market.

→ When it’s below zero, technology has underperformed.

A few points on this:

• Technology has outperformed the broader market by 11.5% over the last 50 trading days. The spread peaked at 18.9% on October 7.

• Historically, technology has outperformed the market by an average of 1.02% over a rolling 50-day period.

• The +2 standard deviation level is 10.02%. The spread has crossed this level 10 times before.

• The last comparable stretch was April–July this year, when the spread reached an unprecedented 8-standard-deviation move.

The spread remains above the +2 standard deviation level — a distinct threshold for future returns.

Historically, when the spread is above this level, RSPT has underperformed RSP by an average of 1.21% over the next 50 trading days.

Additionally, news of progress by China’s top memory chip maker adds another potential headwind for technology. It could give traders/investors a reason to take profits on recent tech gains.

Takeaway: Technology’s relative strength is stretched, and history suggests the group could lag over the next 50 trading days. Developments in China’s chip industry could add to that pressure.

THE TAPE

THE HIGHS AND LOWS

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Material, data, and information in this newsletter are for informational purposes only. This is not tax, legal, or investment advice, and does not constitute a suggestion, solicitation, or offer to buy or sell securities. TTI believes this information is reliable but does not warrant its completeness or accuracy.