Saturday, 18 July 2026 · Weekend Edition · 10:00 London

Chip selloff forces rotation to small caps.

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Signals

Chip selloff

Chinese startup’s new AI model triggered a semiconductor rout, with momentum trades unwinding sharply. Bloomberg and FT both flag Nvidia and AMD leading declines as investors reassess AI assumptions. SMH lost 2.18% last session but is still up 49% YTD — the air pocket below is deep. The selloff exposes crowded positioning; any stabilization could trigger a violent reversal, so short with caution.

SMH

Sell Semiconductors ETF — Three sources confirm chip selloff, and SMH directly captures the worst of the unwind; down 2.2% last session but still heavy profit to take.

$556.5 -2.18%
NVDA

Sell Nvidia — AI bellwether, down 2.21% last session and still up 7.4% YTD, making it a crowded short to ride the repricing.

$202.8 -2.21%
AMD

Sell AMD — Speculative AI peer, YTD +122% but momentum breaking; higher beta adds risk if the selloff extends.

$495.8 -1.03%

Market rotation

Citi’s Beata Manthey says sharp rotations are needed to broaden the rally beyond tech. With chips crumbling, the rotation is materializing: IWM held flat last session while QQQ fell 1.5%. IWM sits just 3% below its 52-week high, QQQ 7% below — the gap has room to widen if tech weakness persists.

IWM

Buy Small-cap equities — Citi’s rotation call plus price action confirm small caps are the beneficiary; only 3% off highs with momentum.

$294.0 -0.52%
QQQ

Sell Nasdaq 100 — Tech-heavy index seeing outflows as rotation accelerates; 7% below peak with further downside likely.

$695.3 -1.50%

AI divide

IBM’s revenue warning underscores the gulf between AI winners and losers in tech. The legacy IT giant is an AI outsider, and its sales miss reinforces the spending shift toward AI infrastructure. IBM shares fell 2.91% last session, now just 4% above its 52-week low, suggesting further pain for non-AI tech.

IBM

Sell IBM — IBM’s own warning confirms AI laggard status; shares near year lows, so downside is already steep, but trend remains negative.

$212.7 -2.91%

IG bonds

Hyperscalers’ AI-fueled bond issuance is crushing investment-grade debt. Bloomberg’s Vossos and Martin report Microsoft and Amazon bonds are dragging global indices. LQD is only 1% above its 52-week low, so much pain is priced, but relentless supply keeps the overhang alive.

LQD

Sell Investment-grade bonds — Single source flags supply drag; LQD already near lows, but the deluge of new AI debt won’t stop soon.

$107.6 +0.06%

Mining equipment

Mining equipment makers Sandvik and Epiroc collapsed 9%+ after order slowdowns tied to falling precious metal prices. Sandvik is 18% below its 52-week high, a direct capex proxy. GDX has shed 2.8% in a week, hinting that miners may follow with spending cuts.

SAND.ST

Sell Sandvik — Order slowdown hits Sandvik directly; -9.3% last session but falling metals suggest further downside.

$338.1 -9.33%
GDX

Watch Gold miners — Miners’ capex cuts could drag GDX; watch for confirmation from gold prices and producer guidance.

$71.32 -0.11%

Energy policy

Amundi is pressing the EU to let transition funds hold oil and gas, a potential regulatory tailwind for the sector. BP rose 1% on Iraq investment plans. XLE has rallied 26.4% YTD and is near its high, so positioning is crowded, but this policy push adds a fresh catalyst.

XLE

Buy Energy stocks — Amundi’s push plus BP’s expansion support energy; XLE is already strong but policy shift opens institutional demand.

$57.68 +1.16%
SHEL

Buy Shell — Major European oil stock that could benefit from inclusion in transition funds; up 2.4% last session.

$3236 +2.41%
BP

Buy BP — Iraq investment adds operational growth, and Amundi’s policy push provides a secondary tailwind.

$517.1 +1.35%

Treasury rates

UBS AM’s Kevin Zhao is shorting Treasuries, betting US growth will erode haven appeal. But yields actually fell last session amid geopolitical tension, per WSJ. TLT sits near its 52-week low, so the short trade is late, yet the long case is contested. This split makes direction uncertain — watch the next payrolls print.

TLT

Watch Long-duration Treasuries — Sources split: UBS is short, WSJ notes yield fall. TLT near lows, so positioning is key; wait for catalyst.

$84.52 +0.37%

Refining margins

Gasoline prices will stay higher even if oil falls, because refining capacity is strained, WSJ’s Jinjoo Lee reports. Valero Energy, a pure refiner, jumped 3.13% last session to a new 52-week high, reflecting expectations of wider crack spreads. With fuel markets lacking buffer, refiners are the energy standouts.

VLO

Buy Valero Energy — Single source flags refining bottlenecks; VLO is a direct play, already at highs but momentum strong.

$309.6 +3.13%

Earnings moves

Premarket losers were sharp: Netflix −10% on a revenue miss, Intuitive Surgical −14% despite a beat as guidance disappointed, SpaceX −3.5% on a launch abort. Verizon gained 1% on store sale plans. These are single-event driven; ISRG is now near its 52-week low, so further selling may be limited.

VZ

Buy Verizon — Restructuring plan to sell stores and cut jobs lifted shares 1%; defensive name with a catalyst.

$43.59 -0.66%
NFLX

Sell Netflix — In-line earnings and revenue miss triggered a 10% premarket drop; near-term momentum negative.

$68.95 -7.26%
ISRG

Sell Intuitive Surgical — Guidance disappointment sank the stock 14%; near 52-week low, but weak outlook keeps pressure on.

$345.4 -14.15%
SPCX

Sell SpaceX — Launch abort news caused a 3.5% drop; low-conviction short on single-event noise.

$124.0 -5.43%

Most original take

FT Companies · 18 Jul 2026

The London IPO market isn’t as bad as it looks

The London IPO market is not as bad as the narrative suggests. Despite high-profile defections to New York, the UK is on course for its best year of new listings since 2021, with a solid pipeline of large deals. The perceived underperformance ignores the actual activity level, and the pipeline remains robust. EWU’s undervaluation may reflect this misplaced pessimism.

Read original ↗

Our view

Today’s signals draw a sharp line through the market: the AI trade is unwinding. A Chinese startup’s new model is the match, but the tinder was extremely crowded positioning. Semiconductors are leading the selloff — SMH lost 2.18% last session while small caps held firm, a classic rotation. Citi’s call for sharp rotations to broaden the rally is playing out in real time. The energy complex is the outlier, with refiners at all-time highs on stretched capacity and policy tailwinds from Amundi’s EU push. The bond market is a mess of contradictions: hyperscaler supply is crushing IG credit (LQD near 52-week lows), and UBS’s Zhao is shorting Treasuries, yet the haven bid is tugging yields lower. That’s a recipe for whipsaw.

The counterargument: the chip selloff may be overdone. The Chinese model’s actual threat to Nvidia’s dominance is unproven, and the Blackwell ramp is still on schedule. If next week’s tech earnings surprise, the rotation could snap back hard, punishing new small-cap longs. UBS’s short Treasury thesis is sound if the economy holds, but the haven bid suggests geopolitical risk is underpriced — a doveish Fed or an escalation could crush that trade. TLT at its 52-week low tells you the short is crowded, and the unwind could be violent.

What’s missing from coverage: the Fed. With violent rotations and a Treasury market torn between fundamentals and haven flows, the September meeting is a huge risk event that no one is discussing. Also, the AI capex story isn’t going away — hyperscalers will keep issuing debt, so the IG supply overhang will persist. That’s a structural headwind for credit that deserves more attention.

The cleanest expression isn’t a single ticker. It’s the dispersion: long small-cap value (IWM) versus short tech growth (QQQ) captures the rotation. Pair long refiners (VLO) against short semiconductors (SMH) plays the energy/tech divergence. With IWM just 3% off highs and QQQ down 7% from its peak, this trade has room to run.

Last Weekend Edition's signals, today

From the Weekend Edition on 12 Jul 2026 — 3/5 signals moved in the predicted direction.

Today's scan: 169 articles considered · 13 surfaced · across 13 publishers

Generated Sat 18 Jul 2026 9:05am London · 14,111 views

Bloomberg Markets · CNBC Investing · CNBC Markets · CoinDesk · FT Alphaville · FT Companies · FT Lex · FT Markets · MarketWatch Top · Nikkei Asia · SCMP Business · The Information · WSJ Business · WSJ Markets

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