Oil Up, Tech Down
The Bill For The Buildout
AI’s construction bill was the market’s problem this week. Meta Platforms (META) said it expects $135–$145 billion in capital expenditures this year, including principal payments on finance leases. That spending supports orders for chips, power equipment and data centers. It also puts the return on those investments under a harsher spotlight.
Thursday brought the clearest verdict: the Nasdaq Composite fell 2.6% as technology stocks sold off. Friday added to the damage: the S&P 500 lost 0.5%, the Nasdaq slipped 0.2%, and Brent crude settled at $116.72 a barrel.
Treasury bonds rallied over the week despite rising oil prices. The official ten-year par yield fell from 5.09% to 5.00% between October 16th and October 23rd, after reaching 4.96% on Thursday. Government borrowing costs and the cost of financing an AI project can move in different directions.
We examined the financing question in AI’s Next Bottleneck Is Cash: a company’s ability to fund its next data center now matters as much as its appetite for one.
How We Traded It
Monday: We paired a bullish software recovery setup with a bearish earnings idea. The software trade filled; the bearish order was canceled unfilled. Our Split Decision alert laid out both cases:
Tuesday: We returned to Calumet (CLMT) after a profitable earlier exit. Its renewable-fuels expansion and debt reduction supported the business case, and it returned to our Top Names. The new bullish trade filled below our entry limit. See Repeat Winners:
Wednesday: AI-designed drugs still need physical testing. Investment-research firm Citrini Research used Claude to design candidate molecules and Twist Bioscience (TWST) to help make them. That’s a concrete example of AI creating demand for laboratory services. We opened another bullish trade on Twist, following two profitable exits earlier this year. Our Claude Still Needs A Lab alert explains the opportunity:
Thursday: A fresh Top Names signal brought us back to an inventory-automation company whose September order hadn’t filled. This time, the bullish order filled. The company’s upcoming earnings provide the next test of the thesis. See Another Chance At A Top Name:
Friday: Biotech Resilience
Biotech gave us a different source of potential upside as momentum stocks struggled. ClearPoint Neuro (CLPT) held its ground during Thursday’s selloff, and its role in delivering gene therapies supported an exception to our usual technical entry rules. Both bullish biotech orders in Friday’s Finding A Floor alert filled:
Closed Trades And Uncapped Calls
We completed two profitable options trades this week and made nine partial exits. The partial exits included losing put spreads and six short-call buybacks, which removed the upside cap on the remaining long calls.
Our completed trade on chipmaker Advanced Micro Devices (AMD) earned $270 before fees: its $386 put-spread profit on October 6th more than offset the $116 loss on the call spread we closed Monday.
Our weekly Exits post details the individual trades and remaining positions.
Our Year-To-Date Results
Through October 23rd, our 278 completed trades averaged 20.6% on original maximum risk, before fees. Continuously deploying equal amounts of risk across these trades would imply a 52.1% simple annualized return, before fees. The card below summarizes the results and links to our public record of completed trades.
What We’re Watching Next
At least 27 companies we hold positions in are scheduled to report earnings next week.
The coming week brings a packed earnings calendar: Google parent Alphabet and Microsoft on Wednesday, October 28th; Amazon and Eli Lilly on Thursday, October 29th; and ExxonMobil and Chevron on Friday, October 30th.
The Federal Reserve meets October 27th–28th. The cloud companies’ capital spending and cash generation will provide another check on AI financing, while the energy producers report against a backdrop of rising oil prices.
For our next trades, we’ll keep weighing company-specific catalysts, financial strength and options pricing alongside our quantitative screens. This week’s entries ranged from software and renewable fuels to inventory automation and biotech; each needed its own investment case.
From software recovery to gene-therapy delivery, our alerts explain the investment case, option structure and exit plan before we place our trades. Become a paid subscriber to receive the actionable alerts, or subscribe free for our public posts.
Our Start Here page includes a public sample alert and explains how we structure and manage our trades.