The share of stocks above their 50-day average fell to 21%, matching the March low. Yet Fairlead Strategies’ Katie Stockton says three warning signs would make her more bearish.
Stockton, the firm’s founder and managing partner, sees support intact and suspects last Friday marked a short-term low for chips. She still calls the setup somewhat fragile.
Can a Narrow Rally Keep Holding Up?
Breadth tracks how many stocks join a market move. Stockton told CNBC’s “Squawk Box” it has thinned, even as charts still show a bull cycle.
“you can’t argue against a bull cycle right now.”
Katie Stockton, Fairlead Strategies, on CNBC
The Philadelphia Semiconductor Index (SOX) lost 11.4% last week in a chip stock rout unmatched since April 2025.
BTIG, an investment bank, says the slide could last into 2027.
What Would Make Katie Stockton More Bearish?
She pointed to three warning signs. The first is support breaking across many individual stocks at once.
The second is wider credit spreads, the extra yield investors demand to hold riskier corporate debt. She sees some stress, but not enough for a bear cycle.
The third is a decisive breakout in the Cboe Volatility Index (VIX), Wall Street’s fear gauge. She watches resistance such as its 200-day moving average.
CoreWeave rents out AI computing power and funds data centers with debt, making it a live credit test. After its stock fell roughly 16% on Oct. 14, investors demanded about 14.8% to hold its 2032 notes. Stockton, however, still calls the stress somewhat localized.
Meanwhile, she expects the 10-year Treasury yield to stall near 5.25% for weeks before resuming higher. Freddie Mac’s 30-year mortgage rate stood at 7.40% on Oct. 15, up from 6.95% on Sept. 17.
The stakes reach past one company. London Stock Exchange Group data shows Alphabet, Amazon, Meta and Oracle sold over $228 billion of bonds through Oct. 13.
Wider spreads would test that funding. WisdomTree’s Jeremy Siegel has issued a Nasdaq crash warning of up to 30% if AI spending disappoints.
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