After a flurry of excitement during last week’s post election momentum, things died down early this week.
Then they turned.
Now, let me be perfectly honest:
I didn’t see us correcting this quickly.
In fact, I thought those “pause” days we got early this week were a good sign because the market didn’t immediately start erasing some of the big gains.
You see, usually when you get a big pop and it’s unwarranted, the market will go to work cutting back on it right away – we didn’t get that at all.
Instead, we got pure sideways movement:
To me, this was a pretty good sign that the market was comfortable at these highs and our next break could be higher.
Then the market dipped a bit lower yesterday after a neutral open…
Then Powell spoke and it moved further…
Then today opened with a significant gap down and continued lower…
And all of a sudden, we’ve got a pullback on our hands.
Now, like I said, this is definitely not what I was expecting in the back half of this week.
My accounts can confirm that:
Ouch!
But the bigger question is whether we’ll get a deeper correction from here.
I don’t have a big, bold prediction but a couple things to keep in mind:
- Yes, this looks like a real pullback now and there are some key levels we could test. We are already at about the 5,900 level on the S&P futures which I think is the first area of impact. From there, 5,825 is probably the next stop
- We’re not even at the halfway point between Nov 5th low and Nov 11 high. So while this looks ugly, it could just be a ‘centering’ and then off to the races from here. Let’s stay zoomed out
- Risk On assets like Bitcoin, Tesla and Nvidia have faired better the last 2 days than safer assets like the indexes and gold. That doesn’t feel like a meltdown to me.
Actions I am taking:
Right now, nothing in my “buy and hold” is changing and my flagship services (which are mostly bullish) are just sticking with the rules.
I have taken some drawdown this week, for sure, and some people get antsy when a few losers hit. I get it! But I try to remind folks that I took some drawdown in Feb and March 2023… I took some drawdown in Aug – Sep 2023… I took some April 2024.. I took some in July and Sep 2024…
All of those periods had some ugly weeks, Some days where losers felt like they were “stacking up” in the narrow view.
But this is what Jan 2023 – current looks like:
So you can see why I am very glad that a few weeks or even months didn’t shake me out.
That’s still my position now.
I’m willing to change if the market dictates it, but that will take a good bit of confirmation from here.
Nate Tucci
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