No Government, No Problem: Life Is Good!
The government shut down, but the bulls are open for business, sending stocks to all-time highs.
Life is GOOD on Wall Street!
So let's talk about the 10 things you need to know right now, starting with…
1. Small Caps Are Rocking HARD
Yes, the big caps are off to a great start this quarter, with 45 SPX stocks making record highs in the past 3 days.
But the real story is the small caps rocking hard, with IWM outperforming SPY and QQQ by a decent margin.
We're also seeing strength in other rate sensitive groups like utilities and biotech.
Why?
Because the market's still banking on rate cuts, which are good for small caps (at least according to conventional wisdom).
The CME's Fedwatch Tool shows a 97% chance of a quarter-point rate cut in October:
Now, this begs an obvious question: could the October rate cut create a massive sell-the-news reaction?
The answer is yes. Of course.
But if everyone's expecting a sell-the-news… maybe we just keep on rocking?
2. Next Friday Is Now Important
Unfortunately, the October 3 Nonfarm Payrolls report has been delayed to the 10th, so we have to wait for one more week to confirm what we know – the job market stinks.
And judging by the action in the small caps, the market is behaving like we got an awful jobs number that gives the Fed more room to cut.
Or maybe the bulls are taking the attitude that “if the bad economic data isn't coming out, the economy is actually good.”
Who knows?
But let's look at my new #1 economic indicator:
3. The Slop Bowl Recession Is real
Yes yes, I know the stock market is not the same as the economy.
But if people can't afford slop bowls, we have a problem.
(a slop bowl is a mash-up of food from a fast casual restaurant, usually served in a bowl)
Chipotle (CMG), Cava (CAVA), and Sweetgreen (SG) have been destroyed this year for various reasons including slowing sales and rising costs.
And I'm calling this chart my “Slop Bowl Indicator:”
If people can't afford burrito bowls, what can they afford?
4. Bitcoin Is Going WILD
Bitcoin hit a new record high above $123,000 on Friday as the market embraces an anti-establishment theme in the wake of the government shutdown.
Ethereum and Solana also posted solid gains, though they are still below their own all-time highs.
Will we see catch-up trades?
Maybe – so put 'em on the radar.
But do you know who's still the boss in terms of performance?
THIS:
5. Gold Is Still Dominating
For all the talk about Bitcoin and Ethereum domination and crypto treasury companies, did you notice that gold is still kicking butt?
It's outperforming both the flagship cryptos with a 47% gain this year.
And the VanEck Gold Miners ETF (GDX) is up a crazy 127%:
What can we say?
It's been an amazing time for gold bugs, who waited for this type of action forever.
6. The Ultimate Trump Trade RAGES On
It's been a while since we checked in on the “Ultimate Trump Trade” a.k.a. the basket of stocks that benefit from financial market volatility and rising stock/crypto prices, including:
- Robinhood (HOOD)
- Interactive Brokers (IBKR)
- Coinbase (COIN)
- Charles Schwab (SCHW)
- Webull (BULL)
They are having an amazing year, topped off by Robinhood's 301% gain:
By the way, did you know that Robinhood is the #1 performing S&P 500 stock of 2025?
And just a few years ago, it was left for dead.
Congrats to those who held on.
7. The Earnings Are Coming
Aside from next week's economic data (namely Powell speaking Thursday & NFP on Friday), the next big thing for the market is Q3 earnings season.
The fireworks start Tuesday October 14 with JP Morgan (JPM), Johnson & Johnson (JNJ), Wells Fargo (WFC), Goldman Sachs (GS), BlackRock (BLK), and Citigroup (C) all hitting in the morning.
According to FactSet, Q3 earnings for S&P 500 companies are estimated to grow by 8.0%, up from 7.3% on June 30.
So estimates have gone up.
In recent quarters, estimates were crazy low, making it easy for companies to beat forecasts. And S&P 500 earnings crushed expectations overall.
Now we have the opposite situation.
I don't like this. Not one bit.
8. Cathie Wood Is Having a Heck of a Year
Fundstrat's Tom Lee is the hot strategist of the moment, which is well-deserved because of his amazing calls.
But Cathie Wood, hero of the post-pandemic bull market is killing it.
The ARK Innovation ETF (ARKK) is up 57% year-to-date:
Tesla (TSLA), which is down year-to-date, is almost 12% of the ETF.
So it was a boat anchor hanging from ARKK's neck in terms of performance.
And ARKK still killed it.
Why?
Because of big bets on winners like Coinbase (COIN), Robinhood (HOOD), Shopify (SHOP), and Palantir (PLTR).
Well done!
9. It's a Great Year for Garbage
One of our favorite screens to run in Koyfin is for companies with these attributes:
- $2.5 billion or higher market cap
- $100 million in sales or less
In other words, companies that don't even have sales, let alone profits – that are highly valued in the stock market.
We came up with 34 stocks and these are how they are doing in 2025:
- 28 are up and just 6 are down
- The average return is +95% (this includes the losers)
Tom Lee's Bitmine Immersion Technologies Inc. (BMNR) is in #1 with a 630% gain, while the President's Trump Media & Technology Group Corp. (DJT) is in last place with a 49% loss.
Here's the full table:
10. Options Traders Need to Stop Doing THIS
Scott Bauer of Prosper Trading recently sat down on the T3 Alpha Show to discuss what he learned as a trader for Goldman Sachs and on the CBOE Floor.
If you want to stop losing big money in options, you must listen to Scott:
ATTN: Serious Options Traders
There Is Just ONE Epic Trade Every Week