ALERT: THIS IS WHY MARKETS ARE CRASHING TODAY!
In a Nutshell
Markets opened with a sharp sell-off despite stronger-than-expected GDP and PCE data, triggered by Apple's announcement of steep price hikes on iPads and MacBooks due to rising AI-related chip costs. The 5% drop in Apple shares, given its massive market weight, sparked broad fear-driven selling across tech and crypto, with MSTR, STRC, and Bitcoin all hitting multi-week lows. The speaker views the move as an overreaction following the prior upside overreaction to Micron's earnings, and positioned long on MU as a short-term trade.
These notes were generated by AI and may contain inaccuracies.
Markets opened with a significant gap down on June 25th at 7:50 a.m. Arizona time. The LPP team took advantage of the volatility by adding to shorts, covering shorts, going long, and then going short again during the live trading session. The speaker went long on MU (Micron) after shorting it, noting that the decision to go long should not influence others' decisions. Micron appeared oversold following its earnings report, potentially positioning it to lead market recovery.
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The NASDAQ 100 experienced one of the biggest sell-offs observed in such a short period of time. On the five-minute timeframe, markets were pushing higher and celebrating Micron's earnings when the PCE report and GDP report were released. Both reports came in better than expected, with the GDP report showing 2.1 actual versus 1.6 expected, indicating the US economy is accelerating.
Despite these bullish indicators, markets shifted dramatically as soon as trading opened. The speaker expressed frustration with this type of market behavior, describing it as a "full rugpool" rather than a normal correction of an overbought market. Markets had been creeping up slowly, making new highs, with reports pushing prices even higher before the sudden reversal.
The PCE report came out better than expected with adjustments noted. The GDP report significantly exceeded expectations at 2.1 versus the 1.6 forecast. Despite these positive economic indicators showing accelerating US economic growth, markets sold off substantially.
The sell-off was attributed to Apple's announcement of raising prices on nearly every major iPad and MacBook due to AI demand driving up money and storage chip costs. CEO Tim Cook stated these price increases were "unavoidable."
Specific price changes included the iPad Air increasing from $599 to $749. Apple's large market cap combined with the 5% decline in a short period raised concerns about broader market issues. This sparked fear and panic selling, potentially representing an overreaction.
The speaker noted concern when observing Apple's 5% decline, questioning what fundamental issue might be occurring. After identifying Apple's price increases as the catalyst, the concern shifted to whether this represented a needed market correction following the overreaction to Micron's news on the upside.
Micron was viewed as oversold enough to justify buying the dip as a trade rather than a long-term investment position. The speaker still considers Micron somewhat elevated despite the purchase.
STRC hit lows of $73, significantly below its $100 target price, resulting in nearly 30% losses for investors who purchased at $100 while expecting 11.5% annual interest returns.
MSTR broke below $90 per share, hitting lows of $86. Bitcoin reached lows of $58,000, creating significant concern among crypto investors.
Apple's large market cap and 5% sell-off appears to have injected fear into the market, potentially causing an overreaction on the downside following the earlier overreaction on the upside. Markets appeared to be settling with uncertainty about recovery for the remainder of the trading day.
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