Market Crash Incoming? Here's What Just Happened
In a Nutshell
Markets sold off sharply after Iran rejected peace talks, erasing overnight gains and triggering heavy losses in semiconductors, with SK Hynix down 9%, SanDisk 12%, and ASML 8%. The trader is holding long positions (down $3-4k), buying dips on names like Micron while trimming on strength, aiming to limit losses to $5k and avoid revenge shorting. Next week’s FOMC decision and earnings from Microsoft, Meta, Apple, and Amazon add volatility risk, while rising bond yields and low US oil reserves remain key concerns.
These notes were generated by AI and may contain inaccuracies.
Markets dropped after NASDAQ was up nearly 1.5% during overnight and pre-market trading, reaching highs of 695 just a few dollars away from 700. The market rejected these highs and began selling off, leading to new lows below Friday's levels. Semiconductor and memory chip stocks were hit significantly harder than the broader market. SK Hynix dropped 9% on the day, SanDisk fell 12.4% and reached as low as 14% down at one point, ASML declined nearly 8%, and Micron sold off after initial support attempts.
The biggest mistake in this scenario is not cutting losses or trimming positions, but rather revenge trading by opening shorts when markets are already down 5-7%. Overtrading just because markets move against you is problematic because individual traders are irrelevant to the market's direction. The approach involves buying the dip on Micron, recovering part of the position through aggressive buying at signs of support, trimming when recovered, and now being down $3,000 to $4,000 on the current position while maintaining a long stance. The goal is not to lose more than $5,000 on the day, with excitement about potential oversold reversals based on price action confirmation.
The S&P 500 erased all gains and turned negative after Iran rejected peace talks, which was part of the process. The peace deal or ceasefire announcement that appeared agreed upon from the US side is no longer being accepted by Iran. Trump has overused peace talk and ceasefire announcements multiple times, making markets skeptical of these claims. The US strategic oil reserves hit the lowest level since 1983, which explains Trump's openness to potential peace talks. Bond yields are beginning to creep back up, directly impacting the rate at which the US government borrows. There are also reports of very low munitions stockpiles, which Trump has denied, though he typically denies everything until forced to acknowledge reality.
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