Tuesday was a heck of a beat down that felt like it came out of left field.  Professional investors waited for the new month to ring the register and still get credit for a strong August performance. I’m not buying that theory. The session was fraught with panic, and at one point, everyone became resigned to the notion that the only thing that could stop the pain was the closing bell. 

Investors were undoubtedly anxious coming into the session, which might have exaggerated selling.

The question is which parts have been the most clobbered - our confidence in the Fed, our confidence in the data, or the confidence in the economy's strength? I think it’s a combination of all the above.

Tech Takes a Huge Haircut

Although they go back to ancient Egypt and Greece, the mullet hairdo typically has the lifespan of a Mayfly when a few brave souls think it's time to make it a thing.

These days, I’m beginning to wonder if Artificial Intelligence (AI) is nothing more than a modern-day tech version of the mullet.

Few Winners

Okay, I’m being facetious, but yesterday looked like more than a fire drill as holders of AI-centric names beat a hasty retreat.

Selling triggered additional selling, and soon, Technology (XLK) was in complete freefall.

Only Consumer Staples (XLP) and Real Estate (XLRE) eked out gains.

Recently, hot sectors also succumbed to selling. It was simply a rough and tumble day that further underscores that for all the talk of rotation, mega-cap growth, especially Technology, must play a role in leading the parade, or there will be no parade.

Dot.Com Redux?

There was a time when publicly traded companies would affix dot.com at the end of their already-established names and watch their share prices zoom higher.

And anything with dot.com at the end of the name took it on the chin.

Yesterday, all the hot AI stocks were slammed as investors sold first and asked questions later. Here’s the deal; however, this is not the dot.com situation. I suspect many buyers were using leverage and had no choice but to sell.

Seeking Havens

Large-cap value was the best of the worst as investors sought old-school safety.

Downside Bias

Not all markets are looking at short-term downside bias.

Red Flags

West Texas Intermediate (WTI) tumbled 4.36% to $70.34, landing at the 2024 low point.

The Volatility Index (VIX), aka the Fear Index, spiked 33.3% to 20.71 and brought back memories of the Carry Trade debacle.

Today’s Session

Markets opened mixed this morning. We will get job market, JOLTS, data at 10:00am ET and will dive into it in the afternoon note.

Comments

I sold all my Nvidia yesterday, just not as early as I wish I had. Still, I only ended up in the red on the 3 most recent purchases of NVDA. The rest of my portfolios held pretty well because after reading your book and attending the webinars, I had started started buying 20 stocks, evenly divided, among the 11 sectors. So, while tech was dying, some of my stocks in other sectors were up slightly. Ginger Ruoff on 9/4/2024 11:06:29 AM

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