AI STORY ALREADY DIED

Kevin Muir (0:04)

Hit it!

Patrick Ceresna (0:05)

It's Friday, October 16th, 2026, episode 303 I'm Patrick Ceresna.

Kevin Muir (0:11)

And I'm Kevin Muir. This week, it's a no-interview show, so it's me and Patrick. Dig in, kick back, and let's hear what the charts are telling our resident technical analyst.

Patrick Ceresna (0:20)

Well, listen, we're going to get to the charts here, but get us a disclaimer here, Kev.

Kevin Muir (0:23)

Nothing in this podcast should be viewed as investment advice, listeners should consult an investment professional before making any decisions regarding topics mentioned in the show. Side effects of Too Much Huddle may include the Core Weave Contagion Syndrome, the AI Debt Hangover Disorder, or the Cosby Freefall Fatigue.

Patrick Ceresna (0:41)

Ooh, that's all three things that I'm suffering from in the...

Kevin Muir (0:46)

All right, let's get to the charts. Lots to talk about, interesting times right now. What do we got?

Patrick Ceresna (0:52)

All right, well, listen, Kev, this is a one... It's been like a one month or more. Actually, it's been almost six weeks since me and you actually did a session together. We both been traveling, having a great time while the market started things. We really should have just a deep conversation about how shit is developing because the macro story has really dynamically changed in two months.

And we really need to dig a little bit deeper into everything. I don't even know where to begin. I mean, do we start with talking about interest rates in the Fed and what's happened in the last...

Kevin Muir (1:35)

Well, Patrick Marguerite knew Stir Trader all the time. You love talking about stirs.

Patrick Ceresna (1:39)

So why don't we start with that? The other thing is, was like the AI story has to be like, so like which one do you think we start with?

Kevin Muir (1:47)

They're intertwined to a certain extent as well. So you just pick Patrick.

Patrick Ceresna (1:51)

All right. Okay, let's start off with AI. Because this is very raw and real right now. And the bond market thing is very relevant, but it's been sort of happening for the last month and everyone sort of already understands a good chunk of it. So we can save it for a little later. So let's start off here with just looking at the chart on the S&P 500

And we can see that it's staying above the 50-day moving average, staying in a bold trend. And this may be the single most deceptive chart that exists out there, because it does not in any way reflect what is actually happening in the markets.

And this dispersion, kind of like where the correlations of the indices to the underlying components, we haven't seen something like this since 1999

Kevin Muir (2:49)

Well, I think it's even worse than that. I saw UBS recently had something where they said the realized correlation of the S&P 500 is the lowest it's ever been, in essence, in modern history.

Patrick Ceresna (3:02)

I could believe that.

Kevin Muir (3:03)

So the actual realized correlation is off the charts. And Patrick, I think we spoke about this before. I remember you talking about the generals and how, you know, if we were to get it for the market to go up, we needed the generals to go up as well.

The reality is that since we had those discussions, the generals have exploded to the upside and everything else has gone no bit.

Patrick Ceresna (3:26)

Well, yes, and that will actually was the story up until this week.

Kevin Muir (3:33)

Right.

Patrick Ceresna (3:33)

And so what I want to start off with is just looking at the breadth of the market because, and it hit its low on the 1st of October where we were at 20% of stocks above their 50 day moving averages. In other words, only one out of five stocks were maintaining bold trend ahead of its 50 day moving average. That means four out of five stocks were in some form of a downtrend or pullback or correction or full on bear market decline or whatever it's happening. And that was obviously driven by the bond market. And I want to dig deeper into the bond market, but when interest rates were skyrocketing, it caused the hurdle rate to rise, and anything that is yield sensitive, valuations, anything else had to be repriced. It was like a 2022 kind of bear market event where basically interest rates are going up and subsequently all assets had to be repriced down. And this meant that the vast majority of the market was responding negatively, but it was disguised by the fact that like you were saying, the MAG 7s are such a huge component of the index, that so long as they could maintain bull trend, then the S&P itself is not reflecting what is actually happening under the hood when you dig a little bit deeper. And the sectors were all getting hammered, but that changed in the last two weeks. And particularly the most evident thing was in the last few days. And when we saw yields starting to come off from their highs, and now here I'll just show like the 30 year, literally peaked on October 8th.