This market is definitely one of those “hide your wife, hide your kids” kind of moments.
It’s not really a surprise. Anyone who’s been following me on social media or reading my newsletter knows I’ve been calling this for at least three weeks.
Revealed: How Crowd Psychology Fuels the “Loaded Spring” Setup
Table of Contents
The Big Picture
To me, it’s really about the de-risking trade. Taking money off the table.
Think about it…
All these high fliers, the big tech names, have been on absolutely EPIC runs over the last couple of years.
But also, we have the midterm election tomorrow…
This Election Is AI Sensitive
I try not to bring politics into trading and my market commentary. I try to stay away from it.
That said, there’s one side that’s basically looking to let AI do what it wants to do. The other side is looking to regulate it.
So, what’s happening in the markets right now is people are being smart.
Whether it be hedge funds, or people trading their own accounts, they’re taking risk off the table.
What you have to remember is…
Cash Is a Position
We’ve got so much uncertainty out there. Who knows which way the election is going to go? Can you trust the polls? Do you throw them out?
It’s a total wildcard.
Then there’s the Middle East. Word on the street is that the war is going to pop off again after the election.
What we’ve seen over the past week is just a lot of smart trading by a lot of smart people.
While everyone else is freaking out, they’re ringing the cash register.
My Take
This de-risking doesn’t change the fundamental idea over the long-term. The AI sector is still a strong play. This is a short-term, de-risking moment until after the election. Then, everyone will reassess.
When these stocks start trending back up in a month, you simply re-enter the strongest and go from there.
It might seem scary today, but the election is tomorrow. Who knows what Wednesday will bring?
Watchlist
With everyone freaking out about the tech sell-off, this play is a little contrarian. Nasdaq, Inc, (NASDAQ: NDAQ) is primed for 23-hour trading starting in December.
NDAQ 6-month, daily candles
They’ve been talking about 23-hour trading for a decade. Now, with crypto and the betting markets, the exchanges decided it was time to open up.
So, we got a fundamental case for NDAQ to stay long in an ugly market. Look for solid entries on pullbacks. Remember, make a plan and trade the plan.
On My Radar
- Crypto bros are reeling after the biggest hack in history
- Intel (NASDAQ: INTC) is still a great American story so, be ready to buy when this firms up
- Get ready for next Monday starting today (regardless of which way the election goes)