Yesterday’s growth sectors had a harsh session, particularly Technology (XLK) and Communication Services (XLC).

Technology and Communication Services were pulling the entire market out of the dumps.

Slings & Arrows for the Tech King

Nvidia’s (NVDA) rise has been nothing short of a story for the ages. Since the unveiling of OpenAl ChatGPT, Nvidia's stock has carried the entire market, becoming a target for non-believers as they play a parlor game of guessing the demise of Artificial Intelligence (AI) chip demand.

The naysayers have been wrong the entire time, yet their voices continue to resonate. So, when there is a negative headline out of China regarding possible curbs on Nvidia’s older chips, a ploy to force the U.S. to lower export restrictions on newer, more energy-efficient chips, the stock moves lower.

Even news of monster revenue growth for OpenAI fell on deaf ears.

Later in the day, news that Nvidia was buying a wholesaler, Lepton Al, immediately took on a new twist – they are buying the company to hide something. Then, was a scuttlebutt of Microsoft (MSFT) canceling orders, and it all morphed into a dark cloud over a vulnerable stock.

Here are revenue assumptions for the next three calendar years:

• 2025: $196 billion
• 2026: $246 billion
• 2027: $238 billion

Yesterday, the stock lost approximately $170 billion in valuation on the potential risk of losing $17.0 billion. This is beyond crazy and unjustified unless there is more to the story. I’m inclined to believe the China news is low-level saber-rattling. 

But the naysayers are in control for the moment – they won’t always be.

Market Breadth

Market breadth was as ugly as you expect, except for up volume, which came in substantially above down volume on the NASDAQ Composite.

Market Breadth	NYSE	NASDAQ
Advancers	1,000	1,380
Decliners	1,775	2,988
New Highs	45	52
New Lows	66	217
Up Volume	1.25 billion	4.79 billion
Down Volume	2.24 billion	3.69 billion

I’m concerned about the S&P 500 (SPX) chart. The last trip below the 200-day moving average saw a sharp V-shaped rebound. There has been a similar attempt this time, but it ran out of gas.

Advancers

Consumer Staples (XLP) names packed the top advancers list as investors retreated into their foxholes, but there were other compelling names, including the biggest advancer in the S&P 500.

Blue-Collar Stock

When I think of the best-case outcome from stricter tariff policies, it includes more manufacturing in America, and there is one company synonymous with providing work clothes, Cintas (CTAS).

The company also provides work clothes to the automotive and pharmaceutical industries. Perhaps it’s a good omen or a reminder that the hysteria is being overplayed.

Trump Signs Tariffs on Imported Cars

President Trump signed higher tariffs last night and says more are on the way. If the word “uncertainty” was scaring everyone, then rest easy – the man is serious.

Today’s session will be crucial because would-be buyers have the luxury of waiting, and selling will trigger more selling.

Today’s Session

There was a slight positive shift in the AAII sentiment survey, but 52.2% of retail investors remain bearish.  The fifth consecutive week of 50% + bearishness has only happened four other times, and each was during a bear market.

The noise is loud and won’t stop now or over the next four years.  The next few sessions the market has to regain equilibrium and I would like to see it creep back above the 200-day.

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