👀 $6.7M of Insider Buying Meets $103 Crude and a 7% Chip Rout

Good afternoon and happy Sunday!

It was a messy week, so let’s get through the recap before we get to the one trade that mattered.

Let's get into it.

📊 Market Performance

The Dow closed Friday at 52,215.16, down 652.82 points (1.23%). The S&P 500 finished at 7,623.68, off 0.52%, and the Nasdaq Composite ended at 25,955.34, down 0.21%. For the week, the Dow gained 0.4%, the S&P 500 lost 0.5%, and the Nasdaq shed 0.7%. That follows a 4.48% Nasdaq drop the week before, so the Nasdaq is down roughly 5% over two weeks.

The divergence is the story. The Dow is now up about 8.6% for the year against about 11.7% for the Nasdaq. At the end of September the gap was 5.9% versus 15.6%. The market isn’t collapsing. It’s rotating out of the crowded trade. The S&P 500 sits about 11.4% higher on the year.

🔻 Key Drivers

📉 The AI trade took a real hit. Thursday was the Nasdaq’s worst session since June. The Philadelphia Semiconductor Index fell nearly 7% and the Nasdaq Composite dropped 2.6%. Disappointing reports from Meta and Lam Research set it off, and the damage spread. Friday brought no rebound: the selling spread into defensive sectors like staples, utilities and healthcare. The VIX closed above 20.

🏦 The Fed went from hike watch to hold, almost overnight. The tech rout sent money into Treasuries. The 10-year yield fell 19 basis points to 4.95%, its biggest one-day drop since March 2023, and the odds of an October hike dropped to 7.2% from 27.7% a week earlier. Don’t confuse a hold with relief. The market still puts a December hike at roughly 81%. September CPI came in at 3.7%, above the 3.6% estimate. The 10-year was back at 5.00% on Friday.

🛢️ Oil is doing the Fed’s job in reverse. WTI closed just above $103 a barrel. Brent climbed past $116. Reports of missiles hitting vessels near the Strait of Hormuz and Saudi energy sites keep the supply scare alive. Crude at this level feeds inflation, and inflation keeps the Fed on the hawkish side.

💰 Earnings are strong, and prices don’t care. Third-quarter S&P 500 earnings are on pace to be up more than 32% from a year ago, with over 100 companies reported. A 32% earnings growth rate and a 5% Nasdaq pullback in two weeks tells you the market is repricing what it pays for growth. It isn’t repricing the growth itself.

🏗️ AI infrastructure has a financing question. The week’s sharpest comment came from Jensen Huang, who said demand for neoclouds is off the charts but capital is scarce. Demand isn’t the problem. The cost and availability of money is. That’s the backdrop for this week’s insider story.

🎯 Applied Digital’s two top executives bought stock. Form 4 filings dated October 19 show CEO Wes Cummins bought 55,803 shares at $18.04 and President Jason Zhang bought 300,000 shares at a weighted average of $18.86, both on October 16. That’s about $1.0M and $5.7M, roughly $6.7M combined, in open-market purchases. The details are in the Spotlight below.

• 📉 One bad chip day moved the 10-year more than any Fed speech has in two years.

• 🔄 The Dow’s year-to-date gap to the Nasdaq shrank from about 10 points to about 3 in four weeks.

• 🛢️ $103 oil and a 5% 10-year are a tax on every growth multiple.

• 🏦 A Fed hold Wednesday is expected. What’s being priced is December.

• 💰 Earnings up 32% don’t matter much when the discount rate is moving the other way.

• 🕵️ Insiders rarely buy into a falling stock, so when two of them do at the same time, take note.

👀 What We’re Watching Next Week

🏦 Wednesday 10/28, Fed decision, 2:00 PM ET. Markets are leaning toward a hold. The statement and press conference matter more than the decision, because a December hike is still priced in. Watch the 10-year against 5%.

💻 Wednesday 10/28 after the close, Microsoft and Alphabet. Both report right after the Fed. The question is whether AI capex guidance keeps rising at these borrowing costs. After this week’s chip rout, a raise will have to be a big one.

📦 Thursday 10/29, Amazon, GDP and PCE. GDP and PCE arrive before the open Thursday, and Amazon reports after the close. A hot PCE print on top of $100 oil would test the bond rally that started Thursday. The ECB also meets Thursday.

🛢️ Crude at $100 (WTI) and the 10-year at 5%. Both lines are within a day’s move. Break above either and the rotation out of tech gets harder to stop.

🕵️ Insider Spotlight: Applied Digital (APLD). The trade is the $6.7M above, so the context matters.

• Who and how much. Zhang’s purchase lifted him to 2,839,227 shares. Cummins’ position stands at 5,874,453 shares, including RSUs and IRA holdings, with no 10b5-1 plan reported.

• Why it stands out. Over six months insiders made seven open-market trades in APLD: these two buys and five sales. The early-October filings from the CFO and CEO were share withholding for taxes at $25.38 and $23.68. That’s routine, not discretionary selling. The buys came more than 20% below those prices.

• The setup. Roth/MKM reinstated coverage at Buy with a $35 target, about 81% above the $19.33 price at the time. The stock was down 38% over six months. APLD also signed a definitive agreement for a 50 MW Texas AI data center joint venture with Soluna, with Applied Digital taking a 51% stake. Fiscal Q1 revenue was $341.9M, up 322% year over year. The stock ended Wednesday almost 9% higher.

• The risk. The news flow points to faster capacity growth, but investors still face heavy leverage and financing risk. That’s the same financing problem Huang flagged. Insider buying shows conviction, not a guarantee. Size it accordingly.

Next week: the Fed, three megacaps and PCE all land within 48 hours. Keep an eye on the Form 4s too.

This newsletter is for educational purposes only and is not investment advice.

That's the week. See you next Sunday.

— Silas P. Insider Authority | insiderauthority.com

Insider spotlight of the week…#APLD

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