Small-Caps Lead a Broad Rally as Tech Bounce Stalls
Easing long-term yields and oil prices lifted the Russell 2000 to its best day since early August and saw 9 of 11 S&P 500 sectors higher, even as weakness in Tech dragged on the cap-weighted index.
Another Sentiment Indicator Shows a Bearish Turn
The tech stocks are due for an oversold rally. Sentiment remains complacent, but more bears are joining the fray.
Netflix Shares Drop After Cutting Sales Forecast
Netflix ($NFLX) shares are down over 5%, even as it beat on third-quarter earnings, after guiding fourth quarter sales below estimates. That would be a fourth straight quarter of slowing sales growth. If the decline holds, it would put the shares at the lowest levels since August 2024.
The pace of growth has fallen from 17.6% in the final quarter of last year to a projection of 11.5% for this year’s fourth quarter. The company blamed its sales shortfall on the advertising business, which is on pace to deliver $300 million less than the company expected according to Bloomberg.
Tuesday’s Closing Stock Market Data
Closing Volume
– NYSE volume flat to its one-month average
– NASDAQ volume 3% below its one-month average
– VIX index: down 5.86% to 17.36
Breadth
S&P 500 Sectors
% Movers
Heat Maps
Position: None
Gap Between Market’s 2 Tiers Starts to Close
SpaceX saw beats on both the top and bottom line but is trading flat in front of the conference call.
SpaceX Rises After Earnings
Shares in SpaceX ($SPCX) are up 2% in the after-hours after reporting 161% revenue growth for the third quarter, driven by the company’s artificial intelligence business and Starlink Subscriber growth.
The company reported net income of $4.4 billion more than double estimates. That’s compared to the net loss of $541 million the company reported last quarter, and Starlink showed growth in consumer subscribers, now at 13.6 million, up from 12 million subscribers in the last quarter according to Bloomberg.
AI operating income was a positive $431 million vs street estimates of a $13.5 million loss. Capex on the AI side was below consensus while total costs and expenses of its Space segment, which includes launch, were up $367 million year-over-year. Still the majority ($16.4 billion) of its $19.59 billion in capex for the quarter was for the AI (now SI) unit.
While notably the SI unit overtook Connectivity (Starlink) in terms of revenues, the connectivity business represented the majority of the company’s profits with $2.37 billion in the latest quarter.
My View on Netflix
Repeating for emphasis, I would not bottom fish in Netflix ($NFLX).
I expect in line-to-better 2Q2026 results but a possible lower forward guidance as margins are pressured.
From last month:
Netflix Is Too Low to Short and Too High to Buy
I would continue to avoid buying (and “bottom fishing”) in Netflix (NFLX) for the reasons I have previously mentioned:
* Netflix has nearly saturated the domestic market (as well as many other developed countries). These markets are significantly more profitable than the non developed arena.
* Future Netflix sales/profit growth will come from developing country markets that provide substantially less revenue (and income) per subscriber.
* Netflix’s original content programming has been unspectacular over the last 12 months (or more) — and existing content has suffered.
In the past I have been short NFLX, but it is no longer priced as an attractive short.
Position: None
BY Doug Kass · Sep 22, 2026, 1:50 PM EDT
Position: None
Nothing to Do at the Close
Yesterday there was a large market on close sell order (over $8 billion). Today there is no real imbalance.
Position: None
Tweet of the Day (Part Trois)
From my pal Vitaliy:
Position: None