Morning Call Sheet: Tech sell-off, AI concerns and market outlook — watch on CNBC.
Brent Kochuba, founder of SpotGamma, joined CNBC’s Morning Call Sheet to explain why the market’s largest recent moves have come to the upside, and why the semiconductor decline likely has little to do with the Anthropic headlines.
Semiconductors have fallen roughly 15% since a Chinese memory producer announced faster production, and the S&P 500 recorded its first 1% down day in 53 sessions on Wednesday. Brent Kochuba, founder of SpotGamma, joined CNBC’s Morning Call to discuss how the larger exposure for investors here may be to upside volatility risk rather than the downside most of the market is watching.
Upside Moves Have Been The Larger Ones
The largest single move of the past two months came on the day Meta released a new model, when the stock rose nearly 10% and the Nasdaq 100 added about 3%. Downside sessions since, including Wednesday’s 1% decline, have stayed smaller. Realized volatility — what an index actually delivers, as opposed to the implied volatility priced into its options — has run hotter on up days than on down days, and the selling since has looked more like rotation between sectors than a broad exit from stocks.
The Right Tail Deserves Attention Too
That asymmetry matters for anyone leaning defensive. If positive news arrives from one of the large model developers while investors sit underweight, an upside chase can develop quickly, and it would land in a seasonally firmer stretch of the year. Brent sees that right tail as the risk investors stepping into a bearish stance are least prepared for. The sell-off may well continue, but the moves lower have been orderly so far while the moves higher have been abrupt.
The Chip Decline Predates The Anthropic Story
The decline in chips began about a week before the Anthropic valuation story, after Chinese memory maker CXMT announced faster production. The drop appeared first in Korean equities before reaching US semiconductors. Selling tied to Anthropic showed up in perpetual markets only days later, around October 13. Traders appear to be separating the two stories, since one concerns a single private company and the other concerns memory supply and the revenue data centers generate. SMH has bounced off the 540 area several times, which makes it one of the key levels worth tracking through earnings season.
What Should Traders Now Watch?
We encourage traders to watch two things into month end. The first is whether SMH holds the 540 area it has defended repeatedly, since a clean break would suggest the rotation out of chips has further to run. The second is whether market up days keep delivering the larger moves, because a downside session that outruns anything the upside has produced lately would weaken the asymmetry behind the right-tail argument.
Brent Kochuba founded SpotGamma and appears regularly on CNBC. He was previously a portfolio manager at Seven North Capital Management, building options-based strategies, and a derivatives broker at Wolverine Execution, Credit Suisse and Bank of America.