Stock Market Falling? This is When You Strike
In a Nutshell
Markets have erased over $300B after Iranian attacks on tankers in the Strait of Hormuz, pushing QQQ down 2.4% and semis sharply lower, though the index still holds above the key 700 support. Traders should wait for confirmation at 700 before shorting a break or buying the reversal, avoiding early entries while overleveraged. Cash on the sidelines from prior overbought levels positions investors to capitalize on the next recovery once support or reversal is confirmed.
These notes were generated by AI and may contain inaccuracies.
Markets have been more bullish than bearish overall. Although current sentiment appears incredibly bearish, a bearish day lasting too long has not been very likely. A market correction is long overdue, but there is nothing new happening right now. It might feel like a lot of fear depending on current positions, but the overall NASDAQ market through QQQ has not yet broken below 700. The 700 level was discussed as a common support range over the weekend, while the common resistance range sits around 730-740, representing oversold and overbought levels.
Over $300 billion has been erased from the US market in the last 30 minutes as Iran attacked two commercial vehicles in the Strait of Hormuz. Additional attacks have instilled more fear into the market. The S&P 500, Dow Jones, and NASDAQ are all down while oil is up. A fourth tanker has been attacked and hit by Iran. Semiconductor stocks are getting hit the hardest today due to events in the South Korean market.
Samsung reported earnings with great results, but guidance was not as strong as what was priced in. Nearly 50% of South Korea's market is made up of two companies, giving it significant influence and injecting fear and uncertainty into the market. Micron is below $900 per share, SanDisk is down 14%, Coreweave is down 7%, and Intel is down 11%.
QQQ is down 2.39%. Markets are oversold enough that going short does not make sense, but they are bearish enough that buying the dip early carries risk of continued decline.
Set alerts and stay patient rather than trying to time entries precisely. Wait for confirmation of support being established or reversal. Buying the dip early requires tolerance for more downturn. Waiting eliminates that pressure. The 705 level on QQQ is cheap, but 700 is cheaper. The more the NASDAQ sells off, the more overall markets will sell off.
SpaceX was included in the NASDAQ today, one of the quickest inclusions ever, and immediately sold off 5-6%.
A few days from now, markets could form V-shaped recoveries testing previous highs around 740, or Trump could send out a tweet. Alternatively, things could worsen with more uncertainty and fear injected, leading to a break of support at 700 and a gap down. On the daily chart, this is still in the very early stages of a possible break of support with no full confirmation yet. Markets have been more bullish than bearish, giving more weight to bulls than bears.
If confirmation of a break of support occurs, begin shorting when sell-offs happen. If oversold conditions find support and begin to recover, go long with the market.
The only people freaking out are those incredibly overleveraged at overbought levels who were warned. There was no reason to buy at all-time highs using 2x to 4x leverage. Being light at overbought levels in anticipation of pullbacks allows cash to be on the sidelines. Welcome sell-offs to take advantage of dip-buying opportunities and make money when markets recover, as they often tend to do.
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