AI death?

As I write this, I am reading posts declaring the end of the world, once again.

I love days like this.

As I had written in a previous article, NDFI had hit 70% levels, R2FI hit 85% and so we were probably due for the market to finally find a reason to panic and have a drop.

That has aged perfectly.

The NASDAQ100 is down 10% from highs, teetering on a technical correction.

The Russell was slightly more stubborn to drop, but is down today almost 4%, the beginning of a move downwards for some mean reversion I had referred to previously.

Long bonds has hedged out the drawdown from stocks, albeit not 1:1, and I am still taking drawdown overall.

But when markets are declining, it's not the time to sit on hands, it's time to open your eyes and look at what opportunities are offered.

I fondly remember back to August 2023, semiconductors had a similarly terrible time, panic over a variety of issues, both geopolitical and economic, had caused a bit of a correction in markets.

I had decided at that point, to start loading SOXL in the low 18's. 

My god, that was the best trade I have ever taken in my life. But I didn't hold. I closed out at a very decent gain around 35%. I could have returned over 400% and I'd be living on a beach in St Lucia and buying girls houses just to win their hearts.

Instead I am stuck building Minecraft houses instead, broke as always.

But is the chance back again? SOXL is down more than 50% from highs. Just today it's down 23%

The % of stocks above their 50D average in the SOXX etf is at just 6%, down from 95% only 2 weeks ago.

And my beloved NDFI is likely to reach 30% within weeks. As of last market close it's at 50%, down from 74% at it's last local high, I am always a buyer at 30% levels.

The AI hype is not over. It may well be a bubble, it may well go further down, but the technology is real, it will and already is relied upon by hundreds of millions of people, businesses and the technology is only advancing further.

Setbacks in technology is normal, but in this case  there is none. The decline in tech is not related to tech as such, it's more related to the exasparated expectations in their earnings and thus impacting their valuations if they don't over-achieve.

If you went to school, were expected A* and you got an A, you aren't going to go home and get punished by your parents for it. Yeah ok, typical analogy for a 20yr old to have and was untrue for me because I did get in trouble for getting 1% of my science exams wrong. But you get the idea.

Accumulate soon. Not just yet, but soon.