1.Index Overview: Profit-Taking Emerges, Mixed Close
U.S. equities ended Friday with a split performance. The S&P 500 slipped modestly but held above its 5-day moving average, while the Nasdaq also retreated. The Dow eked out gains, supported by UnitedHealth (UNH). After a strong week, some investors opted to lock in profits, though overall sentiment remains cautious.
Key Data & Flows
- Retail Sales: July retail sales rose 0.5% m/m, slightly below expectations (0.6%). Market reaction was muted as traders continue to price in two rate cuts this year, with a 25 bps move in September still seen as highly probable.
- CFTC Positioning: Net short positions on S&P 500 futures jumped by 74,016 contracts (total nearing 400k). Analysts attribute this to hedging rather than outright bearish positioning.
- Jackson Hole Outlook: BofA strategist Michael Hartnett flagged Aug 21–23 as a likely profit-taking window, with markets primed for a “buy the rumor, sell the fact” response to Powell’s speech. Morgan Stanley expects Powell to preserve room for September cuts but to rule out a 50 bps move.
2.Stock Highlights
1. UnitedHealth (UNH): Hedge Fund Darling
Shares surged over 10% post-market after filings revealed major new stakes: Berkshire Hathaway initiated a $2B+ position (500k shares at $411 cost), Soros Fund added exposure, and Michael Burry made UNH his largest holding (20k shares + 350k call options).
View: After being halved from $600 highs, rate hikes in 2025 could boost margins, supporting a potential rebound above $400.
2. CoreWeave (CRWV): Unlock Pressure vs. Nvidia Support
84% of Class A shares came off lock-up following Q2 results. Insider sales (e.g., Director Jack Cogen unloading 240k shares) and block trades by JPMorgan and Goldman (avg. $97) weighed heavily, sending shares toward $93 pre-market.
Counterweight: Nvidia increased its stake from 78.2% to 91.4%.
Strategy: Watch if selling pressure exhausts below $100. Tiered entries (95/80/70) or selling OTM puts could exploit elevated implied vol.
3. Intel (INTC): State Backing Speculation
Stock gained on chatter of potential U.S. government equity support to bolster domestic chip manufacturing. With Intel the sole U.S.-based foundry, Washington may intervene for national security and jobs.
Trade: Short-term exit near $25–26 if rumors fade; retain longer if confirmed.
4. Micron (MU) & AI Peers: Pre-Earnings Pullback
Tech leaders like Palantir and Tesla have fallen 3 straight sessions, smaller AI names off 30–40%. Traders expect Nvidia’s Aug 27 results to provide a floor.
Outlook: Near-term weakness offers selective entry opportunities.
5. Michael Burry’s Mixed Bets
- Lululemon (LULU): His 3rd largest position (cost $289) down ~30% YTD, dragging performance.
- Regeneron (REGN): Cost basis $587, still under water but rebounded 10% in Q3.
- Estee Lauder (EL): Minor positions also struggling.
6. Apple (AAPL): Buffett Trims
Berkshire cut exposure citing stretched valuation. Shares remain soft, with only a potential bounce into the Sept 9 product launch.
7. Applied Materials (AMAT): Post-Earnings Selloff
Beat on Q3 but guided weaker Q4 amid Chinese inventory issues and export delays. Long-term thesis intact on compute demand and U.S. fab expansion.
Strategy: Accumulate on weakness.
3.Market Takeaways
- Index Resilience: Despite profit-taking, the S&P remains intact above key support.
- Positioning Shift: Funds are rotating toward policy-backed names (semis, housing) and heavyweight institutional favorites (UNH).
- Risks: Lock-up expiries, secondary offerings, and Jackson Hole volatility could spark tactical pullbacks.
- Playbook: Avoid dilution/lock-up names (CRWV, LULU) near term; favor high-certainty earnings stories (Intel, Apple, AMAT) and “policy beneficiary” sectors.
