This Week in the Market
The dominant story this week is a market that went nowhere and a stock that fell off a cliff. The S&P 500 lost just 0.6% last week and 0.9% for October, basically flat. Google, meanwhile, had its worst day ever. Alphabet fell 12.6% on Thursday, wiping out roughly $500 billion in market value in a single session, from $3.97 trillion to $3.46 trillion. That is the second-largest one-day value loss in US market history. We read this as the AI bill arriving: Google's own AI search answers are now eating into the advertising business that pays for everything else.
This week decides whether Google was a warning or the start of something bigger. Apple and Palantir report tonight, AMD reports tomorrow night, and Qualcomm and Arm follow on Wednesday. If their demand language holds, the AI trade stabilizes. If it sounds like Google, the selloff spreads.
Current Trade Idea: Robinhood Markets Inc.
Robinhood Markets (HOOD), the leader in retail trading, has faced a turbulent October.
The stock is down significantly, currently trading around $85. We think this move is mostly market-sentiment-based, not a real problem at Robinhood.
Despite the pullback, Robinhood remains the dominant player in retail trading, a market in which we expect volumes to continue growing.
We are implementing a non-linear share purchase plan, which will be outlined in the next section.
Robinhood Markets Inc (HOOD) – Non-Linear Accumulation Strategy
Our approach is structured around staged accumulation, increasing size into weakness. Initial exposure is minimal at these levels, with size ramped aggressively as price dislocates downward further. This non-linear allocation optimizes the risk-reward by lowering our average cost basis and maximizing upside on the rebound.
At scale, the position is designed to deliver outsized returns should Robinhood mean-revert toward prior highs. The strategy leans on patience, discipline, and asymmetric upside, capitalizing on temporary dislocations in a structurally dominant name at the heart of retail trading and prediction markets.
We dipped our toes at $90, and plan to put a lot more into the position if the price continues to deteriorate. Our current plan is to take profit around prior highs near $150.
Disclaimer: We own shares of HOOD as of writing this. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
