Suddenly, yesterday, everyone was from Missouri, the “Show-Me” state, as carnage reflected doubt and the rejection of “frothy eloquence.” It began with software (IGV) stocks, which have been down for eight consecutive days.

Market Breadth

 

% Advancers
NYSE 33%	NASDAQ 22%	S&P 500 36%	S&P 400 38%	S&P 600 42%

 

There was lots of red in yesterday’s session, with “low volatility” being the only green factor. I was surprised to see small-cap momentum higher. Sales were driven by growth, leading the way again.

Food, beverages, and tobacco were higher, along with a fractional gain in Utilities (XLU).

Tidal Wave of Doubt & Skepticism

Typically, the ARK Innovation ETF (ARKK) is a good proxy for unprofitable Technology (XLK). These names had a strong run last summer, but stalled in October, and have since begun to break down quickly.

Interestingly, retail investor sentiment declined yesterday, with both bullishness and bearishness falling.  People are neutral and trying to get a feel for the lay of the land.

Biting the Dust?

Bitcoin (BTC) also peaked in early October. What was most notable, about the lack of traction, was that the gold rally continued to gain momentum. They are supposed to have the same underlying drivers.  Gold kept moving higher, and Wall Street kept increasing its target.

Yesterday, Bitcoin received an upgraded target of sorts when JPMorgan (JPM) said it looks more attractive than gold and could reach $266,000 in the long-term.  Right now, the short-term looks frightening, even for something as volatile as Bitcoin. It must make a stand soon.

Amazon

Amazon (AMZN) delivered after the close, posting mind-boggling results. But all eyes were on the $200 billion capital expenditures (Capex) announcement, which far exceeded the $145 billion the Street had anticipated.

Instead of engendering confidence, these days, these capex numbers trigger concern and fear. Some see polls of unused fiber-optic cable littering the land, the aftermath of a massive spending spree during the dot-com bubble.

I see companies racing to dominate the space that will dominate our lives for decades to come. I guess these companies could spend that money on buybacks and dividends, but these are growth companies that aren’t ready to slide into the Utilities camp just yet.

Buckle up, this ride is getting rough.

Today’s Session

There is some early relief, but hysterics are dominating right now. Part of the issue is the relentless chasing of hot sectors, regardless of fundamental principles.

This short-termism is a deadly enemy of long-term investing success. The great news is it creates amazing opportunities in its wake. You must have exposure to key parts of the AI value chain, especially in chips, which will be a $1.0 trillion business this year.

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