StockedUp
StockedUpSep 24
Finance

The Stock Market Is Entering Its Worst Week…

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TL;DR

Week 39 is historically the S&P 500's worst week since 1950, averaging a 0.5% loss; meanwhile, 30-year Treasury yields hit 5.47% and Iran-US negotiations signal potential de-escalation.

Key Insights

1

Worst week historically — Week 39 of the year has been the S&P 500's worst week since 1950, averaging a 0.5% loss and finishing positive less than 50% of the time — making next week historically risky.

2

The 30-year Treasury yield hit 5.47%, its highest since June 2004, and has stayed above 5% for 79 straight days — the longest streak since 2007 before the financial crisis.

3

Nvidia and Apple now represent over 15% of the S&P 500 combined, the highest concentration ever for two stocks and well above the 9.1% that Microsoft and GE held before the dot-com bubble burst.

4

Below 200-day average — The S&P 500 advance-decline line just fell below its 200-day moving average for the first time since November 2023 — a technical signal that historically precedes major market turning points including the 2022 bear market and the 2020 COVID crash.

5

Bonds competing with equities — Former Lehman Brothers trader Larry McDonald is flagging a 1987 Black Monday setup, where bonds offering equity-like returns (5%+ yields) push investors away from stocks — the Dow fell 23% in a single session that year.

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Deep Dive

Geopolitical tailwinds boost markets but yield surge dominates

Three major developments hit markets today: US and Iranian negotiators began discussing a phase deal at the UN General Assembly that would reopen the Strait of Hormuz and lift the US economic blockade, boosting equities and pulling oil back. Trump and Chinese President Xi held all-day meetings with Treasury Secretary Scott Bessant calling the trade truce extension until January 2027 a placeholder rather than a breakthrough. Trump also posted on Truth Social that he and Xi want to leave AI exactly where it is. Despite these geopolitical wins, the dominant story remains the spike in Treasury yields — the 10-year crossed 5.1% and the 30-year hit 5.47%, its highest since June 2004, while global government bond yields reached 4%, matching 2007 levels.

Systemic risks flash red: concentration, valuation, and bond competition

The combination of stretched valuations and extreme market concentration has created a dangerous setup. Nvidia and Apple alone make up 15% of the S&P 500, exceeding the 9.1% peak of Microsoft and GE before the dot-com bubble. Former Lehman trader Larry McDonald warns of a 1987 Black Monday parallel where bonds at 5%+ yields became attractive enough to pull capital from equities — the Dow fell 23% in a single session. Adding to the pressure, the S&P 500 advance-decline line just broke below its 200-day moving average for the first time since November 2023, a technical marker that preceded the 2022 bear market, the COVID crash, and the 2018 bottom. Policy risks also loom: the Chamber of Commerce and petroleum industry groups are pushing back against Trump's proposed diesel export restrictions, warning they could reduce fuel production and raise costs for families.

Technical setup in limbo as traders hunt for direction

The SPY opened higher but dipped below critical support at 766.50 overnight, which then acted as intraday resistance today. The index is now trapped in a choppy range from this morning's low around 763 up to today's high around 769, a level that also held resistance yesterday. If the SPY breaks above 769 with positive sentiment from Trump-Xi meetings or the tech CEO dinner later this week, traders could see a run toward 770-775. However, if rejection continues, key support levels are the intraday low at 763.50 and the pre-market low around 762. Durable goods data releases tomorrow one hour before market open and Fed President Williams speaks at 5:15 a.m. Eastern, both potential market movers. September 30th, just six days away, marks the best historical buying point during midterm years dating back to 1928.

Stock-by-stock setups: AI gainers, value traps, and space plays

Nibbius popped 7.5% after BNP upgraded it to outperform with a price target raised from $260 to $399, with Bank of America reiterating its buy at $310. Analysts highlight surging pricing power for neo-cloud AI providers as compute rental rates climb. Dell remains a short candidate at an aggressive 21x forward PE and resistance at $600, with a risk-reward setup where losses stay small but pullbacks could be substantial. Meta rebounded sharply after unveiling the Muse personal AI agent and new lightweight VR glasses, with the stock testing resistance near its all-time high around $796. Rocket Lab won a Space Force contract worth up to $981 million alongside Redwire and Firefly, now trading at $73 after falling from May's $150 peak but holding strong longer-term uptrend support. Three momentum plays flagged: Firefly at $23.60 breakout, Moderna above $196, and MGM Resorts below its $33.30 after-hours low after a 10% sell-off yesterday.

Big money trade: $614K bet on CCC call options into year-end

A trader deployed $614,000 into $7.50 call options on CCC (Corsair Cloud Computing) expiring December 18, 2026, betting on continued upside momentum. The stock provides cloud software and AI tools for auto insurance and collision repair ecosystems and has broken out of its broader downtrend recently, confirming support at $6 — a level that aligns with peaks from March and July. The options are close to the money with ample time decay runway, positioning the trader to benefit if the stock sustains its short-term uptrend through year-end. Near-term resistance sits at $8, with potential for $9-10 if a major breakout materializes. The play captures exposure to an AI-adjacent company in a growing industry without the volatility of pure-play AI stocks.

Takeaways

  • ✓Watch SPY's critical resistance at 769 — a break above signals bullish momentum toward 772-775; failure confirms the bearish week 39 pattern.
  • ✓Nvidia and Apple now represent 15% of the S&P 500 combined, the highest concentration for any two stocks ever — monitor this crowding risk.
  • ✓NBIS (Necloud provider) upgraded to outperform with 53% upside target; position it if SPY holds above 766 intraday support.
  • ✓Monitor Treasury yields above 5% for 79 consecutive days — the longest streak since 2007, which preceded the financial crisis.

Key moments

2:30Week 39 historical weakness

“Since 1950, the index has averaged a half a percent loss during week 39 and has finished the week positive less than 50% of the time.”

3:19Treasury yield warning sign

“The 30-year Treasury yield hit 5.47%, its highest since June of 2004 and has now stayed above 5% for 79 straight days, the longest streak since 2007.”

9:25NBIS analyst upgrade catalyst

“NBI has scored a major analyst upgrade to outperform from BNP today, which raised its price target from $260 all the way up to $399.”

12:27Meta AI agent momentum

“Meta has been pretty popular in the short term as they released a new personal AI agent, Muse, and Mark Zuckerberg even unveiled new nextG AI glasses.”

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