AI's easy money is drying up just as tech volatility hits 23-year highs — short
Created
Thesis
The AI boom has been fueled by cheap debt, but global regulators are moving to shut off the tap. At the exact same time, volatility in tech stocks has hit a 23-year extreme, an event that often precedes major market tops. Adding to the risk, Michael Burry is actively shorting Nvidia even as the company releases new tech. When you combine tightening financial conditions, extreme price swings, and bearish positioning in the leader of the rally, it creates a high probability of a sharp pullback in semiconductor stocks.
Strategy approach
Build a rule-based mean-reversion short strategy on SMH that triggers entry when the ETF rallies >2% in a single D1 session and the 20-day ATR is above its 1-year rolling maximum. Enter short at the close. Exit when price closes above its 10-day high or after 15 trading days, whichever comes first.
Markets and timeframes
What this public preview can establish
- The thesis and strategy approach describe a market view. They do not show whether an entry or exit condition is currently met.
- No inspectable rule definition is included in this public preview. Do not infer a trigger from the thesis or approach.
- No trade count, win rate, or P&L figure is published in this preview. It cannot establish a performance record.
Explore
How CommonQuant researches and tests strategies · Public paper-trading record and its limits · Discover public strategies