Stock Market Dropping? Here's What I'm Watching
In a Nutshell
Markets are volatile with South Korean stocks triggering sharp US declines—SanDisk plunged over 50% from highs, down 30% in five days. Traders bought the dip while keeping positions light, watching for potential gap-downs if NASDAQ breaks ascending support and semiconductor weakness accelerates. Risk management is key: maintain small positions in fair-value chip stocks, monitor Meta/Microsoft earnings tomorrow, and wait for clarity around FOMC and tech results.
These notes were generated by AI and may contain inaccuracies.
A very unique opportunity is currently presenting itself. The South Korean markets have drastically impacted US markets today. SanDisk is down 13% and at one point was down over 17% on the day after already experiencing a significant draw down hitting lows of $1.50. A few weeks ago, SanDisk was trading at $2,300. SanDisk is down over 50% from its recent all-time highs.
ASML has experienced a significant draw down of 3.9%. SKHY is down 6.8%. Nvidia was slightly in the red but picked up. Markets created a V-shaped recovery within a very short period of time, which is very impressive. However, the market gapped up and based off of the lows seen today, all the uncertainty that was injecting itself is still present, including South Korean market uncertainty.
South Korean stock plunges 10.8% and is now down 38.2% from their all-time highs. SanDisk is down 30% in five days and 55% from its record highs. Over $200 billion was lost in market cap since January 202.
The NASDAQ is forming an overbought reversal. There remains uncertainty around the FOMC rate decision tomorrow. Meta and Microsoft are reporting earnings tomorrow, with Apple and Amazon reporting earnings on Thursday. If any of these companies report that they are overspending or overleveraging themselves, this can inject more uncertainty in the semiconductor and chip space. The biggest concern is Meta.
Because of how quickly markets recovered, the approach was to buy the dip while staying light and making sure to have positions if markets begin to recover. Markets hit lows of 2.1-2.2% for NASDAQ's QQQ. Now that the market has recovered nearly 2%, it is testing previous highs. The momentum may or may not continue. If the market breaks the ascending support pattern, there is a big gap down and the uncertainty can begin to inject itself again.
The market showed how low it could go today. The idea and the fear is there, even though markets don't necessarily have to continue making new lows.
At these critical levels when testing previous resistance levels where there has been rejection before and the market is overbought for a potential gap down, the recommendation is to give it time. There is nothing wrong with having an open position but making sure positions can tolerate if direction turns against them. Risk should be managed and mitigated appropriately.
There is significant fear in the semiconductor space currently. The approach is to stay levelheaded and have some skin in the game by buying the dip on chip companies that align with the criteria and appear to be at fair value, but not taking positions so large that another leg down would be problematic.
The overbought reversals are beginning to form. There is potential for a gap down if the ascending support is broken, based on where the market has been rejected at before and the draw down seen earlier. If NASDAQ begins to gap down, semiconductor stocks are likely to drop even quicker as they are not recovering as significantly as the NASDAQ market.
The discrepancy shows that the NASDAQ and the MAX 7 companies are recovering much quicker while chip stocks are struggling to recover. SanDisk is not back to pre-market levels yet. This uncertainty in the chip market requires position sizes to reflect that uncertainty.
Live trading occurs every single morning. When overall markets are down, prices are down. The LPP (Lifetime Premium Package) is a one-time payment with lifetime access priced at $299 off using promo code deal26. Members who signed up in 2018 paid once and still get to watch live trading today. As soon as markets begin to recover, prices will go back up. Preview sessions are available before joining, along with access to the LPP lesson library designed for complete beginners.
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