WARNING: STOCK MARKET IS ABOUT TO GET WORSE...
In a Nutshell
Markets dropped 8.4% and are testing critical 680 support on QQQ, with tariffs, Middle East tensions, and AI spending concerns weighing on sentiment. The speaker bought dips in Tesla and Google for his kids’ accounts while warning against leverage, noting hyperscalers are now cash-flow negative from AI capex. Semiconductors led today’s selloff—M Micron, APLD, SMCI, and others down 5-7%—but he views these as buying opportunities for next week.
These notes were generated by AI and may contain inaccuracies.
$680 billion was added back to the US market in just the last two hours after reports that Pakistan is pushing to restart US and Iran talks. Pakistan has historically been a major mediator between the US and Iran. Markets initially began to recover following the announcement, finding support at 680 for QQQ.
The market is currently testing a critical support range at the lowest levels since the initial rally, with no break below 680 since the rally began. A significant gap down exists. Current market conditions show an 8.4% drawdown from previous resistance levels, with just 1.5% more needed to enter bear market territory.
"There's nothing wrong with buying the dip."
The speaker distinguishes between pullbacks and recoveries versus actual sell-offs that form lower lows and lower highs. If overall markets break support and actively sell off, tech-related sectors including semiconductors, memory chips, and AI will experience further declines regardless of current drawdowns. Individual stocks like SpaceX, Tesla, and Google would drop even lower under such conditions.
The speaker bought the dip on Tesla and Google for his children's accounts - his four-year-old daughter and nine-month-old son - due to significant selloffs. His financial adviser encouraged maintaining some exposure. A few thousand dollars were invested in these positions. The approach prioritizes fair pricing that allows for additional purchases if markets decline further, while still providing exposure if conditions improve. No leverage is used in these purchases.
Markets recovered back into the green, faced rejection, and are now testing current lows down approximately 0.5%. Market direction remains unclear based on Middle East developments. Today's recovery effort appears insufficient to establish a clear bottom.
New tariffs announced by Trump went into effect today, prompting China to warn the US against starting trade wars. Previous tariffs resulted in the US paying back approximately $160 billion. Current concerns include rising inflation, high oil prices, and Middle East tensions alongside these new trade measures.
The AI capex boom is draining free cash flow from hyperscalers and directing it to chip makers. Google is experiencing negative free cash flow for the first time in company history. Hyperscalers are investing heavily in AI infrastructure, creating negative cash flow positions, while semiconductor companies are generating substantial profits from these investments.
Current market conditions present a curveball for potential trades. When buying the dip, investors should ensure they can tolerate recovery timelines and avoid using leverage. Leverage is particularly dangerous when market direction turns against positions.
Verizon reported earnings exceeding expectations and rose 3.71%. American Express reported disappointing earnings and fell 5.25%. Intel earnings were livestreamed the previous day, with a short position opened and covered for $5,800 profit. The position was closed before capturing the full move from 13% gains down to 4% losses.
When trading with profit intentions, taking profits during volatile and uncertain times is recommended rather than being greedy. The distinction between investment and trading approaches is emphasized: investment strategies may tolerate intraday volatility, while trading focuses on daily highs, lows, and directional movements.
Semiconductor stocks declined significantly: Micron Technologies down 5-6%, APLD down 6.5%, Marvel Technologies down 5.9%, SMCI down 1.6-1.7%, SpaceX down 5%, Rocket Lab down 7.6%, and SanDisk down 7.7%. These declines follow green performance the previous day when broader markets were red.
The speaker expressed satisfaction with semiconductor dips as buying opportunities for prepared investors and anticipation for next week's market developments.
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