Earnings Season Heats Up as Chip Bears Circle

US: Semiconductors Under Pressure

Options traders are piling bearish bets on chip stocks ahead of a packed earnings week. Micron, Broadcom, Intel, and Applied Materials all rank among the top targets for negative options flow this week. All four carry RSIs below 35. Taiwan's export orders hit a record $114.2bn in September, the largest September reading since 1984, so the demand picture is not the problem. The concern is valuation and what forward guidance might look like after a year of record numbers.

Short sellers are also adding to positions in CoreWeave. Its SI % FF climbed to 24.8% this week, up 3.6 percentage points in seven days. That is one of the steeper moves among mid-to-large US names.

Earnings: A Heavy Schedule

American Express and SLB both report today. Next week brings Coca-Cola, UPS, PayPal, and Union Pacific. Options on Union Pacific are reading 100% positive over the past seven days. The railroad is up 28.9% year-to-date and carries 13.5 days to cover.

Europe: Autos and Index Risk

Volvo Car reports today. Indian car registrations, which lead Volvo revenue by 56 days and are running 9% ahead year-on-year, point to a constructive quarter. Mercedes-Benz reports Thursday. Dutch car registrations, a dataset measured to lead Mercedes revenue by 26 days, are running 6% below the same quarter last year.

Xero is sitting 2.3% above the MSCI World exit line. ORTEX Index Rebalance Radar puts its deletion probability at 50%, with $437M of potential forced selling. The announcement is due 11 November.

Vaxcyte: A Two-Index Knife Edge

Vaxcyte sits at a rare double junction. It is 0.5% above the Russell 2000 exit line and 0.5% above the Russell 1000 entry line at the same time. A Russell 1000 addition would force $430M of buying. A Russell 2000 deletion would force $1.2bn of selling. The rank date is 30 October. Daily volatility is 4.4%, so a single session could decide it.