MarketSurge powers the charts in this video.
We are experiencing one of the weakest earnings seasons since 2022. Amazon and Google missed estimates. Intel gave much lower-than-expected guidance. Even companies like SpaceX and Meta, which beat estimates and raised guidance, sold off. There is a lot of fear surrounding the AI trade; fear that this might be a major top for the group. It seems any news is bad news now and is sold. The most interesting part about it is that it is happening just two weeks before one of the most-anticipated IPOs in the AI space – Anthropic.
The indexes are currently in a correction mode. The weakness in semis spilled over to software. The market sold Fortinet (FTNT) and ServiceNow (NOW) earnings, and they took the entire industry with them. Small caps (IWM) rallied to their declining 50-day moving average, where they were rejected. The Nasdaq 100 tested its 50dma from underneath in each of the past two weeks, and it was rejected. In the meantime, capital rotated into defensive sectors like healthcare and consumer staples.
Every market environment requires a different approach. April-June and August of this year allowed for multi-week swing trades. What’s currently working is intraday and very short-term swings: 1-3 days. The other alternative is cash/short-term Treasuries. There were obviously some exceptions – crude oil, energy, and healthcare have been trending up in October above their 20EMA. Consumer staples also, but were a lot more volatile. Gold and silver have been trending down below their 20EMA in the past six weeks.
The midterm elections are Nov 3rd. I believe they might end up being a catalyst for the next big move, especially if there’s an overnight selloff.
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