Earlier this month, I reflected on the 39th anniversary of Black Monday, the worst single session in stock market history.  That session was classic capitulation (read).

These days, I believe we are in a rolling capitulation that serves the same purpose.  Yesterday, ten decliners lost $1.0 trillion in market value.

The carnage continues today, with companies posting strong earnings and guidance but still seeing shares hammered.

That’s capitulation.

It's not just investors giving up; Wall Street analysts are too.

Of course, it's tougher for them to flip ratings when the news is good, but they are capitulating big time in their own way.

Western Digital (WDC) posted solid numbers, and the CEO talked about making money beyond the AI picks-and-shovels period, but the stock is being dismantled.

Cantor posted a thoughtful, well-written note acknowledging the “meaningful beat and raise,” and reiterated his buy rating.

But he lowered his price target to $625, down from the prior $900. 

Cantor isn’t alone – check out all the target cuts in names where analysts reiterated their buy or equivalent ratings.

The question now is what will spark an upside reversal.

After the midterms, data center stocks should breathe easier, even if Democrats sweep, because the worst-case scenario is already priced in, but it will not unfold.

Iran War conclusion – the good news is more ships are getting through.

Strong earners are not being rewarded, but they will be.

Seasonality – not just a strong year-end bid; post-midterm rallies have been powerful.

A key technical signal will come from the NASDAQ 100 closing above its 50-day moving average.

Have a great weekend!

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