00:00 Josh

Charles Schwab’s latest STAX report shows trading activity hitting a six-month high in September with investors adding exposure to names like Nvidia, Oracle, and even crypto-adjacent stocks. For more, we’re going to bring in here Joe Mazzola, Head of Trading and Derivative Strategist at Charles Schwab.

00:20 Josh

Joe, it is always good to see you because you have such a good line of sight on how investors are feeling given all those many Schwab customers, Joe.

00:32 Josh

What’s interesting is, if if I’m seeing this right, Joe, it sounds like they’re adding risk, but also nearly 40% feel bearish here. So, am I reading that right? Reconcile that for me.

00:46 Joe Mazzola

No, you got it. That’s why uh, that’s why we look at the stacks because that’s the behavior side, right? So we we we have two surveys that we do or or two measures, is a better way to put it that we do on a monthly basis. The one is the behavior report, which is the Schwab trading activity Index, which is what you highlighted. And then we also provide a uh attitudinal survey if you will, we asked about a thousand traders, how are you feeling right now?

01:13 Joe Mazzola

And what’s interesting, and Josh, this is kind of the the the wall of worry climbing that we’re seeing is that uh not only are they adding risk and staying uh staying invested in the market, you know, they’re they’re switching to more volatile, higher beta names, but yet they’re not feeling very comfortable while they’re doing it.

01:36 Joe Mazzola

I think uh that comes down to a few things. I think um, you know, there’s this belief that the AI trade is maybe a little bit long in the tooth. Uh valuations are high across the technology. and then they look, there’s still concern about uh, you know, what could happen with the trade tariff policy and then also some of the um, you know, some of some of the tumult in Washington if you will.

02:00 Josh

In terms of sectors, Joe, it’s interesting because it looks like, it looks like they’re selling tech broadly, but then they’re they’re buying some some of these high beta AI names like Nvidia and Palantir and CoreWeave?

02:22 Joe Mazzola

Yeah. No, I mean, you got it. I mean it was one of those things where uh you sell, sell the broad-based index or sell the ETFs as a way to kind of uh funnel that money into more of a certain, you know, a small uh sliver of stocks and I I think that’s what we’re kind of seeing. I mean, even if you look at outside of what Schwab Schwab clients are doing, we’ll just kind of look at the overall uh S&P 500. On a day like today, you know, we basically were even advanced decliners. Um and then if you look at market breadth, uh it’s only about 57% of the stocks above the 50 day moving average. So, you know, if you use the analogy of generals and soldiers, it’s the generals that are doing the marching right now and we want to make sure that we have some type of uh protection should there be some unknown catalyst that that shakes up the markets a little bit. We need to get those soldiers involved a little bit more. We need to see that breadth uh wide now.

03:00 Josh

I’m I’m curious, Joe, since we’re talking some AI names here. What what do you make of this talk bubbling up of of an AI bubble?

03:10 Joe Mazzola

You know, it’s interesting in just kind of a circular uh fashion of the the financing that’s going on. I I think it’s something that needs to be, you know, you you need to be at least aware of that. Um,

03:29 Joe Mazzola

and with AMD, a move that we saw today are incredible. I mean, 30% on a the the market cap, the size of AMD, that’s a monstrous move. It’s it’s unbelievable to see something move that quickly. We saw the same thing with Oracle and they, you know, that was number that was number three on our list of client buys in in September. So, you know, the the money’s moving into uh small, uh AI AI adjacent, as you mentioned even kind of the crypto adjacent as well, too.