The Market Is Fundamentally Shifting
I don’t think it’s a secret that we can all see and feel the markets shifting. And it’s making one major shift: from looking for reasons to buy to now looking for reasons to sell.
We have had several one-day dumps in 2024 when we saw single-day big selloffs in the markets, we saw several of these take place between late March, April, and May…
But they were just that… Single-day drops. And very quickly after buyers stepped right in and drove the price to new highs.
In fact, in the S&P 500 alone we have seen over 30 “new all-time highs” this year alone.
But now the question is have we fully shifted?
Are we now in a situation where when the market gaps up or we get some momentum, we’re looking for reasons to sell it right back off or are we just in a lower, summer liquidity move where we were already due for a pullback.
The truth is, even though this dump happened very fast, it’s not a major correction yet.
The market has experienced an insanely bullish run, so big money taking profits off the top before earnings isn’t a shock either.
This could be a very natural July settling before August targets new highs, which happens a large percentage of the time after July selloffs.
But it feels like something bigger could be at play here…
Take the Monday bullishness we had, for example. It felt like a classic move we’ve seen a lot this year where the market quickly builds a floor after a drop and then rips to new highs.
We even started a continuation of the upward trend on Tuesday. Which I, for one, felt was a great “here we go again” move on Tuesday, and even started putting some long positions back on…
Then came Wednesday: and it was a big OUCH.
The biggest down day in the Nasdaq in over 20 years.
Other Signs to Consider
Then there are other hints that this market could be turning.
Look at some of the recent positive earnings like Netflix and Newmont. Both of which I had positions on and crushed their earnings as I predicted, yet the positions didn’t move in my favor.
The market just doesn’t seem confident at all.
Chipotle (CMG) is another great example of this, Chipotle which has been beaten down like crazy even before the more recent collapse.
That made it a prime candidate to recover some of its upside on earnings and it did — for a minute…
Chipotle shot up nearly 20%, in after-hours trading, a move that would usually represent a very positive gap up even if it settled a few percent deeper into the post-market.
But not this time… Chipotle only stayed up for a couple of minutes before reversing so hard that it finished lower than the close.
These are signs that the market is becoming more skeptical (in my opinion).
It’s certainly not a gauge I am using to go all in to the downside — my buy and hold investments remain untouched. But it makes you wonder if that deeper correction we’ve all been talking about the last 8 months is finally starting to set up.
In my mind, August will be the key.
If we see institutional money step back in with confidence and start driving stocks back up, I think September and October should be strong months before the election…
But if August moves us lower or stagnates, I’ll be getting very serious about short positions — and more than that, I’ll keep you informed on what I’m doing.
—Nate Tucci
P.S. We will also have our eye on “Jump Trades” to the downside if this market turn heats up. My biggest trade ever was a bearish Jump so the old adage of “stocks fall faster than they rise” seems to hold up.
