Shutdown Volatility: The AI Trade Reckoning

Fresh news and strategies for traders. SPY Trader episode #1414. A US government shutdown creates a vacuum of official data, shifting the market's focus entirely onto massive technology earnings, particularly AMD and Palantir. We discuss the highstakes 'AI Trade' demands, technical resistance, and tactical positioning for high volatility, including long plays in Tech (XLK) and rotation into Health Care (XLV).

Episode Transcript

(00:00):
Welcome back to Spy Trader , the podcast that gets you ready for the market before your coffee is even brewed .
I’m your host , Chip Stacks , and it's 5 am on Sunday , November 2nd , 2025 , Pacific .
We've got a wild week ahead of us , dominated by massive tech earnings and the unusual problem of a US government shutdown preventing official government data releases .

(00:25):
Buckle up , because volatility is on the menu .
The US market is entering a seasonally strong November , but technical resistance is high .
The overall outlook is moderately bullish , but that hides intense , eventspecific volatility .
The major headline this week is the vacuum created by the government shutdown , meaning we won't get official data like the Nonfarm Payrolls report .

(00:51):
This shifts focus entirely onto private indicators .
We need to watch Monday’s ISM Manufacturing PMI and Wednesday’s ADP National Employment Report very closely .
A significant miss on the ADP would heighten fears of a slowing labor market , creating a major headwind for the broader market , SPY.But the real action is in corporate reports , specifically the Technology and Consumer Discretionary sectors .

(01:19):
The ' AI Trade ' remains the core driver .
Investors are demanding stellar results after the strong October rally , especially from names like Advanced Micro Devices , Palantir , and Arista Networks .
AMD , reporting Tuesday after the bell , is under immense pressure .
Following their 58% October rally , the market needs a significant ' beatandraise , ' particularly on forward guidance related to their MI300 and MI400 AI chips and the new deals they secured with companies like Oracle and OpenAI .

(01:55):
Similarly , Palantir , riding recent Nvidia partnerships , needs to show strong growth in its commercial AI platform business to justify its high valuation .
If these tech heavyweights fail to deliver , expect serious profittaking in the Invesco QQQ Trust .
For rotation , keep an eye on Health Care .
Analysts feel the sector , represented by the Health Care Select Sector SPDR , is overdue for a comeback , supported by M&A and positive regulatory catalysts .

(02:27):
We’ll hear from giants like Pfizer and Amgen early in the week , acting as bellwethers for the largecap pharma space .
Time for the trades .
For broad exposure and capital protection , we remain Neutral/Cautious on the SPDR S&P 500 ETF , or SPY .
Seasonal strength is good , but the technical resistance and high VIX readings suggest slow , choppy gains .

(02:53):
Our main tactical long play is Overweighting Technology , specifically the Technology Select Sector SPDR , XLK , or QQQ .
We are issuing a tactical long recommendation on AMD ahead of earnings , but this is a highrisk , highreward bet dependent entirely on their AI chip guidance .

(03:14):
Use pullbacks in these names as buying opportunities .
If you want a defensive rotation , consider a small , tactical allocation to the Health Care ETF , XLV , looking for potential outperformance if the megacap tech earnings fail to meet lofty expectations .

Finally , remember risk management (03:32):
the recent hawkish Fed tone means bond prices , like the iShares 20 Year Treasury Bond ETF , TLT , face ongoing pressure .
Given the sharp rise in the VIX , anticipate wide swings , especially early in the week as those major tech reports hit .

(03:54):
That’s all the time we have for this edition of Spy Trader .
I’m Chip Stacks , and I’ll catch you next time .