Author: Randy Watts

Randy Watts is Chief Investment Strategist for William O’Neil + Company. Mr. Watts manages William O’Neil + Company’s research department and guides the development of the company’s suite of services. He oversees the strategic direction and focus of the company’s research content, and his buy-side experience provides additional insight that allows the company to leverage its experience and expertise to help clients generate alpha. Mr. Watts has more than 25 years of equity asset management experience with specific focus on large- and small-cap growth stocks. He started his professional career as an Equity Analyst at Freedom Capital Management in Boston, MA. He spent nine years at Westfield Capital Management as an Equity Analyst then as a Partner and Portfolio Manager overseeing a $500+ million growth stock portfolio. Mr. Watts served as a Senior Managing Director for small- and mid-cap growth investments at The Boston Company, where he managed $4 billion in both long and long/short equity portfolios. During his tenure at the Boston Company, he hired, trained, and managed a team of investment professionals. Most recently, he ran a long/short equity hedge fund for Folger Hill Asset Management in New York, NY. Mr. Watts graduated from the University of Virginia with a degree in American Studies and is a Chartered Financial Analyst.

Strategy View

Posted on by Randy Watts

Attached is a note by Randy Watts, Executive Vice President and Chief Investment Strategist, and Kenley Scott, Global Sector Strategist, at William O’Neil + Co. on the current state of the market.

Key Points:

  • Looking to 2026, the market has historically tended to face challenges in the first three quarters of the year leading into the midterm elections, while Q4 has historically delivered very strong average returns.
  • The last six elections have resulted in a changing power dynamic in Congress, offering a potential explanation for the market’s historical weakness during midterm years.
  • Despite that potential headwind, the interest-rate-cut cycle continues, and historically this backdrop has been favorable for equities, as it has been since the current cycle began last September.
    • There are only three examples of a rate-cut cycle coinciding with (or continuing in) the year leading into the midterms (1982, 1986, 2002). The results were mixed, with two positive years and one sharply negative.
  • We remain hopeful that this year will be one of the roughly half of the midterm election years in which the market finishes positive (vs. ~75% of all other years), supported by an improving cyclical backdrop amid lower interest rates.

 

Nvidia Q3 Preview: Strengthening Demand Visibility Amid Accelerating AI Capex

Posted on by Randy Watts

Key Points:

 

  • Nvidia is set to release Q3 FY26 earnings on November 19, 2025, after market close, with the market anticipating strong results. Consensus expects Q3 revenue of $55.1B (+57% y/y) and adjusted EPS of $1.26 (+56% y/y).
  • $500B multi-quarter visibility is reinforcing Nvidia’s dominance with strong bookings for Blackwell/Rubin through 2026.
  • Hyperscaler capex continues to accelerate with cloud spend projected to exceed $600B in 2026, with the Big Four driving 40%+ of Nvidia’s revenue.

 

Market Drags Versus Support

Posted on by Randy Watts

Attached is a note by Randy Watts, Executive Vice President and Chief Investment Strategist, and Kenley Scott, Global Sector Strategist, at William O’Neil + Co. on the current state of the market.

 

Key points:

 

  • Indices consolidating with the leading Nasdaq and microcap index pulling back more sharply.
  • Several divergences occurring:
    • Bullishness remains high, reaching ~60% of advisors despite the pullback. Bearishness is very low at ~15% which is close to historic lows.
    • The percentage of stocks above their 30-week moving average around 50–55%, down from a peak of 75% in September. It did not come close to highs again despite recent market highs.

Strategy View: A Look into the Most Extended Themes/Stocks

Posted on by Randy Watts

Key Points:

 

  • Q3 has been much stronger than the historical pattern suggested, and August-September is on pace for the second best performance in the first year of a presidency since 1970 (2009 best).
    • All sectors except Consumer Staple have beaten their averages, with Materials, Cyclicals, and Technology ahead by double-digits.

Strategy View: U.S. Market History as Rates Fall and Relative Sector Positioning

Posted on by Randy Watts

Attached is a note by Randy Watts, Executive Vice President and Chief Investment Strategist, and Kenley Scott, Global Sector Strategist, at William O’Neil + Co. on the current state of the market.

 

Key Points:

 

  • The interest rate cut cycle is likely to continue, with a fourth cut expected in September.
    • Across 13 prior cycles average number of cuts was six.
    • The economy entered recession in 11 of 13 cases, with exceptions in 1984 and 1998.
    • Market history has been broadly positive in the 12 months following the first cut (S&P 500 +13% on average), with two notable exceptions in 2001 and 2008.