The Stock Market Is Falling Apart (Here's Why)
In a Nutshell
Markets plunged nearly $1 trillion after Iran's president rejected US negotiations, with the NASDAQ dropping 1% and Fed rate hike odds for October jumping to 75% after a 5-year high PMI of 58.4%. The S&P 500 sits near all-time highs only because AI stocks mask extreme weakness—60% of components trade below their 100-day moving average. Oil is approaching $90, 30-year yields hit 5.37%, and private credit redemptions are being capped, all signaling deteriorating conditions and poor risk-reward for new long positions.
These notes were generated by AI and may contain inaccuracies.
NASDAQ dropped 1% immediately after markets opened. Ricky from Techput Solutions was short on PLTR, closed the short early for a $989 gain, then went long and got caught before going short again, currently down $1,000. Break-even on current short position is around 190 or 8975. Position is intended as day trade only with no overnight carry planned.
Nearly $1 trillion was wiped from US markets, metals, and crypto in the last hour after Iran's president stated they will never surrender. Markets had been optimistic about Iran working with mediators to present a deal with the US. This follows a pattern seen over the past 100 days. The market had previously added $1.5 trillion just days earlier.
Markets rally aggressively creates downside risk at elevated levels. Leverage should never be used at overbought levels. Cash purchases are acceptable since liquidation cannot occur with actual money. The speaker has made this mistake multiple times over 10+ years of trading and warns beginners against it. When NASDAQ was at 700, shorting risk was discussed, now at overbought resistance levels, buying too aggressively carries concern.
Iran's president at the UN General Assembly stated they will never bow their head or bend at the knee to the US. Markets are irrational and always seek reasons to recover. Recent market gains were driven by Mag 7 companies hitting new all-time highs with AI excitement. Market sentiment this week differs from previous weeks.
Despite the 1% pullback, strong support remains with no crash occurring. Markets are extremely bullish with dips consistently being bought. Bulls can recover as early as tomorrow. Speaker maintains active short on PLTR with significant gap down potential on larger timeframes but cannot double down due to limited risk tolerance compared to Michael Burry.
PMI report came in at 58.4%, the highest level in 5 years, indicating manufacturing sector strength and strong economy. This is concerning because inflation sits at 3.4% and is expected to rise due to elevated oil prices from Iran conflict. Strong economy with rising inflation gives Federal Reserve more room for rate hikes, unlike weak economy scenarios where rate hikes would be more damaging.
Rate hike probability for October increased from 50-55% to 75% following the PMI data. Fed rate monitor tool shows probability changes based on economic reports. Housing market remains slow, inflation stays high, and labor market appears strong but is actually weak based on calculation methodology.
60% of S&P 500 companies are trading below their 100-day moving average, representing the worst market breadth since March. S&P 500 remains near all-time highs due to AI companies (Nvidia, MU, Microsoft, Google, Meta) propping up the index. Without AI, markets would likely trade 10-20-30% lower.
30-year note rose above 5.37%, back on track for highest daily sentiment since June 2004. Oil pushing back toward $90 per barrel. Apollo, one of the world's largest money managers, limited withdrawals from its flagship private credit fund for the third consecutive quarter, capping redemptions at 5% while investors requested triple that amount.
Current market levels show unfavorable risk-to-reward for new long positions. Profit potential is limited to new all-time highs while downside risk extends to recent lows around 700. Shorting carries greater risk and should be avoided by those not skilled at risk management. LPP live trading sessions occur daily at market open for 30 minutes to an hour with $110 one-time lifetime access fee including lesson library for beginners.
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