2/4/25 Recap

We have a major tech stock problem right now, the QQQ is losing the 100 day and may close under that 100 day for the first time since the tariff crash last April. This isn’t time to be a hero call bottoms on tech stocks, if you want to sell puts lower that is fine but this is a major change of tune for the market. The 200 day is another 6% lower and that is the level you want to begin focusing on as the next big support. The AI trade is just hammered today with NVDA down nearly 10% in a few sessions to 174 and AMD down 16% on a pretty strong quarter. You’re just watching one massive unwind happen in the AI trade, even copper is hit today because of it. If the defacto leader of the AI trade, Google, says or does anything bad on their call tonight, watch out. Carnage is unfolding in tech because of all the leverage out there, pods are blowing up, growth funds are seeing redemptions and that’s how you get these vicious snowballs. Things will be fine, they always are, but short term this chart below looks like more pain is coming. Just avoid tech for the time being and you will be ok. When tech reclaims the 21 ema, then go back in if you’re not trying to bottom fish. For now you have to accept that XLP components like Pepsi or General Mills are having massive 4% daily green days and that this rotation is real.

The overall market is actually ok, below is RSP which is the equal weight S&P and you can see it is clearly at highs and trending over the 8 ema which is again telling you breadth is there and all this weakness is in tech land but because tech is the bulk of weight in the market it is weighing on everything. Make no mistake there is a massive rotation unfolding from tech stocks to everything else right now.

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