r/valueinvesting
Stock market down. Why I think this was a top.
Author claims simultaneous drop in AI and software stocks signals a market top, predicting further declines until late summer.
- Simultaneous decline in AI and software sectors is interpreted as a rare negative signal indicating a market top.
- Expectation of continued market downturns throughout the year, prompting a halt in buying activity.
On Friday, the whole stock market (except few little stocks) was down. This has never happened before, as it was always either AI down, or software down. Never ever both at the same time.
I think this is a sign that we have reached a top and there will be many more red days to come this year. Personally, I have stopped buying and will wait until the stock market will reach the bottom (probably late summer/early fall).
AI and software both red on the same day has actually happened plenty of times. August 2024 carry unwind, September 2022, March 2020, October 2018, every meaningful correction touches both sectors at once. The unusual day would be one going up while the other goes down, not both falling together.
The bigger issue with calling tops from single-day price action is signal vs noise. Tops form over weeks of distribution, not one Friday. The 2021 top took 3-4 months of rolling sector weakness before SPX rolled over. Feb 2020 was faster but vol was already elevated for 2 weeks before the actual high.
Not saying you're wrong about overvaluation. But "stopped buying, waiting for fall" isn't really a position. Either you have conviction to actually hedge or reduce, or you stay invested with smaller size. Sitting in cash for 6 months timing a bottom historically goes poorly. The market gives you maybe 3 chances per decade to time correctly, and most people end up buying back higher than they sold.
It was a macro move, job report was really good which means inflation will be prolonged which means that the fed is not cutting rates but hiking them more than likely, and all of those heavy AI/tech stock use debt to finance there growth. Which means borrowing got more expensive! That’s why it went down.
Why is there always someone who thinks they know what they're talking about in the stock market? Like don't you get it yet?
The market goes up, the market goes down. Nobody knows when, how, why. Sure you can make educated guesses on what SHOULD happen but that doesn't mean anything.
Just 2 months ago one could say the oil shock would send the market back to 2022 levels, but nope, people missed 50% upside on many stocks.
Stop making stupid prediction and DCA over the year.
If anything,
- buy into all the tech infra stocks this week
- throw your login credentials away
- check your profile in 3 years
- ???
- Profit.
I thought you are going to say:
- throw your login credentials in here
lol
yah dm your details ☺️
Nobody knows. Nobody ever knows.
Steve jobs. Dead
This will age like milk in a week.
Jobs go up. People more monies. Inflation. Higher interest. Bad for business. Simples
Jobs go down. People less monies. Less bizness. Bad for bizness. Simplezy.
Probably down considering the mid terms are coming up! Where the US market has underperformed most of the time if you look back! But I can’t look into the future!
3 red days and the bears are already out full force after shutting up for a couple of weeks.
Ha, the 3x inverse ETFs are a great way to be directionally right and still lose money. SOXS decays from daily rebalancing alone, even when SOXX chops sideways. Profitable timing windows are like 5 days max before the math eats you.
Me too. If you know, you know... 😉
A bear market is a market that is down 20% or more from the 52 week high. Bears are people that believe the market is going down.