After an extended oversold period, the S&P Short Range Oscillator finally moved into overbought (at 0.06%).

Position: None 

Position: None

Closing Volume

– NYSE volume 9% below its one-month average 

– NASDAQ volume 16% below its one-month average 

– VIX index: up 0.39% to 15.27

Breadth

S&P 500 Sectors

% Movers

Heat Maps

Position: None

Today’s deadline is a filing deadline, not a decision point. October 13 is a filing deadline, not a scheduled restart or decision date. Chief ALJ Derek Julius set no deadline for a ruling on the motion or for a recommended decision. I couldn’t find reporting yet on what was actually filed today, so what follows is my read of the likely paths. mgmagazinemugglehead

What’s being decided: The order directs the government and other participants to respond to a motion seeking to introduce the newly released GAO report into the administrative record. The government’s response may run up to 20 pages. Other designated participants may respond under the same specifications but aren’t required to. gmlawkindgreenbuds

Likely outcomes after the filings

1. The judge denies the motion and lifts the stay. This is the path the industry commentary seems to expect. The GAO report predates these rescheduling proceedings, does not target cannabis explicitly, and did not conclude that the agencies violated the law or reject the scientific findings supporting Schedule III placement. The judge would then resume work on his non-binding recommendation to the DEA Administrator. gmlaw
2. The judge admits the report but doesn’t allow more briefing. The report goes into the record and the case resumes, with the report’s weight left for later stages.
3. The judge admits the report and allows supplemental briefing. This is what the movants want. It would delay his recommendation further, since the proceeding stays paused while the parties file additional briefs.
4. The judge reopens the record more broadly. This is the least likely and most disruptive path. The movants argue that the proper course is a new evaluation under a written standard, not a final rule on this record. The judge could decide the GAO findings justify more than a short supplement, though nothing so far suggests he’s leaning that way. ndasa

What the government is likely to argue: The GAO report found that for all 84 substances with final rules requiring a federal health recommendation, DEA’s decisions aligned with the recommendation. The agencies also concurred with GAO’s recommendations for written policies and an updated FDA–NIH agreement. That gives them room to argue the report is procedural, not substantive, and doesn’t undermine the Schedule III findings. I can’t confirm that’s the position they took in their filing. muggleheadkindgreenbuds

What doesn’t change: Whatever happens, April’s separate medical-cannabis order is unaffected. Even after the judge resumes, his recommendation is only a step toward agency action, rather than the final rule itself. The DEA Administrator still has to act. mgmagazinekindgreenbuds

Position: None

The Fed’s John Williams, who is a moderate and voter sees no need for rate hike in 2027 at this time with one more interest rate hike appropriate this year:

* He still believes disinflationary forces are at play

* There is no sign that the labor market is contributing to inflation

* He is not seeing broad price pressure outside AI and energy

* This is not an economy that is overheating

* AI is inflation driver I am watching most closely

* He supported September rate increase; Reason for September hike “starts from risk management”

Position: None

Wolf Street howls about the single family home dumpster.  

Sales of Existing Single-Family Homes Scrape along Bottom of 4-Year Dumpster, Supply at 11-Year High. Condo Sales at Record Low, Supply at Record High | Wolf Street

Position: None

While I obviously disagree (see More Tales From Nvidia series) with Jim’s conclusion (I will not manage money based on a “greater fool’s theory” that it is rational to overweight AI even if you don’t believe it will work), his post is important:

Jim F

i just realised the stock market doesn’t think AI works. 

the lack of breadth has been a bothersome contradition in the AI thesis. the thesis as i understand it is, AI tools will drive massive poductivity at ALL cpompanies lage and small. in turn these companies will be willing to share a large portion of the productivity windfalls with the AI tool providers that made it possible. those shared productivity gains of ALL companies will in turn drive the revnue for return of principle plus ROIC of todays spending. in theory that all makes sense. 

the issue i have is breadth doesn’t match this thesis. lets say companies will pay 75% of the productivity gain to the AI providers and keep 25%. that would mean ALL companies in agregate are about to become more valuable by 1/3 the revenue projections diving AI valuations. for eample $100 of productivity gained is $75 fee to LLM’s and $25 of reatined earnings for the company. $25 is 1/3 of $75. so if ALL companies ara about to get this windfall why is the median stock -16% or 60% of the S&P -20% etc etc? 

this has bothered be until today. today i realised the market doesn’t believe the AI revenues are going to happen. however, if you manage money you’re now in a prisoners dilemma. you can;

a) don’t invest in AI because you don’t believe in it. if you did that this year you lost all you AUM. money mangers job is grow AUM and not get best risk adjusted returns. 

b) invest in AI and when it blows up you lose client money. however, all you competitors did as well. so you survive in you relative market share after the blow up. 

this is why it’s actually rational to be overweight AI even if you don’t believe it will work.

Position: Short NVDA (S)

Housekeeping item.

I have covered my GRNY short at $28.08 for a small profit.

I plan on reshorting this trading sardine on any rally.

Position: None 

Here is today’s thing:

* I added to PEP at $126.24.

Position: Long PEP (M) 

– NYSE volume 7% below its one-month average; 

– Nasdaq volume 19% below its one-month average; 

– VIX index: up 0.66% to 15.31

Breadth

SOURCE: Barchart

S&P500 Indexes

SOURCE: Barchart

% GAINERS, DECLINERS

SOURCE: TheStreet Pro

Nasdaq 100 and 

S&P500 Heat Maps

SOURCE TheFly

* The market is more erratic than Selma Blair.

* The action in financials (banks, brokers and private equity) continues to be worrisome.

* Breadth is foul.

Caveat emptor.

Positions: None

KKR: UBS lowered the firm’s price target on KKR to $122 from $123 and keeps a Buy rating on the shares.

BX: UBS analyst Michael Brown lowered the firm’s price target on Blackstone to $116 from $122 and keeps a Neutral rating on the shares.

$APO: UBS lowered the firm’s price target on Apollo Global to $163 from $172 and keeps a Buy rating on the shares.

WGO: Citi analyst James Hardiman lowered the firm’s price target on Winnebago to $24 from $29 and keeps a Neutral rating on the shares. The firm lowered estimates in the recreational vehicle group as part of a Q3 earnings preview. Retail weakness amid higher interest rates and gas prices will weigh on demand going into 2027, the analyst tells investors in a research note.

$FRPT: TD Cowen lowered the firm’s price target on Freshpet to $80 from $85 and keeps a Buy rating on the shares. The firm adjusted targets in the food, beverage and personal care space, saying that despite many large cap staples stocks trading close to five-year lows, the risk/rewards remain unfavorable. Big food sales have stabilized, but lack a clear path back to growth, the analyst tells investors in a research note. TD raised its non-alcoholic beverage sales forecast but says alcohol volumes remained weak through the summer. 

$META: Truist analyst Youssef Squali raised the firm’s price target on Meta Platforms to $1,000 from $763 and keeps a Buy rating on the shares. The firm is adjusting its model with a rollover to its discounted cash flow derived valuation to FY27 from FY26 and also reflecting the expected contribution of Muse, offset by higher capital expenditure view, the analyst tells investors in a research note. Truist adds that it remains constructive on Meta heading into earnings, expecting results at the higher-end of guidance/consensus thanks to the company’s monetization and strong user engagement.

Positions: Short KKR S BX S APO S

Upside

– VFC +4.0% (Piper Sandler and Truist upgrade as signs of Vans stabilization improve turnaround confidence)

– GS +3.0% (Q3 beat, led by surging equities revenue and stronger investment-banking fees)

– UNH +2.5% (Q3 beat and 2026 adjusted EPS outlook raised to at least $20.50)

Downside

– SNDX -17.0% (MAXPIRe Phase 2 axatilimab trial in idiopathic pulmonary fibrosis missed its primary endpoint)

– S -7.0% ($1.25B convertible senior-notes offering raises dilution and stock-supply concerns)

– WDC -6.0% (UBS cuts its target on hard-drive capacity and pricing uncertainty, compounding the storage-sector selloff)

– SNDK -6.0%, STX -5.5%, MU -3.5%, MRVL -2.5%, AMD -2.0% (memory, storage and chip names slide as reported CXMT advances intensify China-competition fears)

– JPM -3.5% (Q3 EPS and revenue missed as fixed-income trading weakened despite stronger investment-banking fees)

– DPZ -3.0% (Q3 beat, but US same-store sales growth slowed sharply, raising demand-recovery concerns)

– JNJ -3.0% (Q3 beat, but medtech growth was soft and international device sales faced geopolitical disruption)

– ADBE -1.5% (HSBC downgrades to Hold, citing open-source competition risks)

– WFC -1.0% (Q3 EPS beat, but revenue and net-interest income missed expectations) 

3:45 a.m.: Fed Governor Waller (Voter) speaks about monetary policy and AI at financial conference, New Delhi; Morning: Fed Bank of Chicago President Goolsbee (Non-Voter) Podcast Appearance — Semafor Compound Interest (Interview will publish to podcast platforms on Tuesday morning); 

10:00 a.m.: Fed Bank of Chicago President Goolsbee (Non-Voter) Podcast Appearance — Kyla’s Newsletter (Interview will publish to Kyla Scanlon’s Substack); 

1:00 p.m.: Fed Bank of Richmond President Barkin (Non-Voter) participates in discussion at the Howard University School of Business, Washington, DC (No text. No livestream); 

4:00 p.m. (approx.) Fed Bank of Boston President Collins (Non-Voter) speaks on “Perspectives on the Economy and Financial Landscape” before the 25th Annual Regional and Community Bankers Conference at the Federal Reserve Bank of Boston, Boston, MA Embargoed text available. Audience Q&A expected. No media Q&A. Open to media via livestream: https://www.youtube.com/@FederalReserveBoston/featuredSource: TradeTheNews

Economic Calendar for Today

Source for below Economic Calendar:  TipRanks

Source: TheStreet Pro

Positions: None.

Source: TheStreet Pro

Break in!

JPMorgan Chase (JPM) misses top and bottom line.

More later.

Position: None 

We are long Procter & Gamble (PG).

From The Divine Ms M this morning:

New Ideas

I was asked to revisit Procter & Gamble (PG), which I recommended about a month or so ago. It is short-term overbought (having run ten bucks in a week), but it still looks like a base in the making to me. I’d love to see a few down days to digest the recent run-up.

Position: Long PG (VS) 

Finding My Way Through An Imperfect Journey

Position: None 

As I noted late yesterday, the S&P Short Range Oscillator, which was -5 to -6 about 10 days ago (a deep oversold) is now close to neutral at -0.66% (vs. -1.96% a day earlier). 

Position: None