When love turns to liquidation — The great rotation accelerates

And the MOMO guys and algo’s just won’t quit - Tech continues to get wrecked – and here is why it matters – this is not random selling; it’s rotation and it’s loud!

Yesterday, it was AMD’s turn – the Momo guys couldn’t’ get out fast enough….Lisa Su – CEO reported a beat on earnings $1.53 vs. $1.32, a 34% increase in sales - $10.3 billion easily beating the estimate of $9.7 billion, Data Centers business up 39%, Personal Computers sales, they rose too, up 34%. Both of those data points exceeding all the estimates – yet they took 17% out of the stock – something last seen in 2017!

So, what was it that made the algo’s and the Momo guys nuts? It was her forecast for the 1^st qtr.…..she suggested that they would be ‘roughly’ $9.8 billion which is below the street consensus of $10 billion. She even made clear that AMD expects ‘giant deals’ with OpenAI, ORCL and the US Dept of Energy and don’t forget – AMD is one of the largest providers of GPU’s and CPUs in PC’s and servers. But, they didn’t care – it was time to hit the SELL button and move on….and by the end of the day – they took $42 out it – and it started with the $27 gap down on the opening – taking it down thru short and intermediate term trendlines – leaving it hanging in the balance now between the intermediate and the long term trendline down at $177.

Now a look at the chart – reminds us that on October 6^th when they last reported – the stock gapped UP $62 (the Momo guys were in love with her)– leaving a gaping hole on the chart – so yesterday’s move along with what we may see in the coming days – could just ‘close this gap’ – something that technicians like to see. Now, that said - gaps represent emotional or liquidity-driven price vacuums, created when stocks move too far, too fast on news, fear, or euphoria. In October it was ‘emotional euphoria’ (estimates weren’t robust enough), yesterday it was ‘emotional fear’ (that estimates are getting away from themselves). That said, not all gaps are meant to be filled — ‘breakaway’ and ‘continuation’ gaps representing structural change tied to true trend changes can remain open for long periods. Emotional gaps tend to retrace. Let’s see what happens next. The stock is quoted UP $4 in the pre-mkt and don’t forget it is up 161% off the April 2025 low.

And that ‘hysteria’ left the tech sector lower again yesterday - The XLK down 2.8%, Semi’s down 4.4%, Disruptive Tech – 4.7%, Ark WEB – 4.8%, Expanded Tech – 2.8%, Quantum Tech – 2.5%.

This is what it looks like when crowded (momentum) trades unwind and capital seeks real growth, real cash flow, and real value. And you don’t have to guess where the money’s going — just follow the trail.

Year to Date - Of the 11 broad sectors – Energy is in the lead up 18%, Basic Materials are up 13.6%, Consumer Staples – remember them – last years underperformer? Well, it is up 12.25% while Industrials are up 9.2%.

Meanwhile, the other 7 sectors – 4 of which were 2025 winners - are either treading water or underwater:

Think Utilities +0.85%, Tech – 5.2%, Financials -1.7%, Consumer Discretionary + 0.3%, Healthcare +0.6%, Real Estate +2.8%, and Communications + 2.9%.

As the bell rang – the divergence could NOT be clearer - the Dow rose 260 pts or 0.5% (think ‘classic boring’ Dow Industrials), the S&P lost 35 pts or 0.5%, the Nasdaq lost 350 pts or 1.5% - and puts that index into negative territory ytd. The Russell lost 24 pts or 0.9%, the Transports gained 456 pts or 2.4% (again think economic strength), the Equal Weight rose 70 pts or 0.9% - see the divergence – between the S&P and the Equal Weight S&P???? While the Mag 7 got kicked in the crotch – falling 586 pts or 1.7%.

The dynamic is amazing….and the speed at which this rotation is happening is even more amazing…. what was LOVE 2 months ago has turned into liquidation — yesterday’s stars are today’s casualties! Or are they hidden opportunities? Because you know – at some point the pendulum ALWAYS swings too far to the left after swinging too far to the right…. Capisce? And clearly, buyers yesterday see opportunity.

Again – the contra trades threw themselves a party…the VIX at one point was up 18% - before closing up 3.5%. This morning it is up 5.8% at 5 am. The VIXY etf gained 1.7%, the PSQ + 1.8%, the SH + 0.5%. The DOG lost ground and that makes sense, since the DOW gained ground.

After the bell – we heard from GOOG – and they showed BIG growth everywhere and BIG spending in an effort to win the AI race. Capex spending expected to be $175 - $185 billion – double what they spent last year….and the Momo guys are not happy – and while they are not crushing it – they are selling it. The stock is quoted down $7 or 2% in the pre-mkt…. but let’s not forget – perspective matters - it is up 140% since the April 2025 tariff tantrum.

Bonds continue to churn… The 10 yr is yielding 4.27% while the 30 yr is yielding 4.91%.

Oil was up 2% yesterday ending the day at $64.50. This morning it is trading at $64.25. It remains in the $61.10-$66.20 trading range.

Gold, silver, and the broader precious-metals complex continue to trade erratically. Yesterday, gold ripped up through $5,000 in the morning, only to reverse hard — falling to $4,850 before settling near $4,964 by the close. This morning, it’s down another $100 to $4,860. Silver isn’t spared either — trading around $77.80, down $6.50. Yesterday the metals & miners ETF (XME) lost 2.4%. Look, these have been dramatic, uncommon moves. Prices were stretched (overbought), the dollar got pummeled, (oversold) and is now lifting its head and so the entire complex is repricing — very similar to what we’re watching play out in tech as excess gets wrung out and leadership shifts.

The dollar is trading up 26 cts at 97.87 – still below the trendines at 98.50. A move in the dollar up and thru the trendlines will ignite a fire under the dollar – sending it higher and that strength will continue to reprice precious metals, adding more volatility to an already volatile complex.

Cryptos continue to get CRUSHED…… Novogratz – trying to explain it away as a ‘sellers’ virus’. A seller’s VIRUS? He also used the patently false narrative – more sellers than buyers….NO, NO, NO….that is not true – there are an equal number of sellers and buyers – it’s just that the buyers see blood in the street, (again think tech and software) so they dropped their bids and the sellers see a void in prices and they panic and BOOM down we go…this morning Bitcoin is trading at $71,400 – down 1.7% or $1200. Ethereum traded down to $2,060 over night and is now trading flat at $2,125. Solana continues to get crushed…trading at $91.80.

European markets are lower…. yes it is another earnings day, but there is also monetary policy decisions expected from the ECB and the BoE – neither is expected to cut rates.

US Futures are churning…. Dow -30, S&P +9, Nasdaq +72, Russell +7.

Eco data today includes – Challenger Job Cuts, Initial Jobless Claims and Cont. Claims along with the December JOLTS report.

Earnings today are spread all over the tape, but let’s be honest - tech and the consumer are going to set the tone. We’ll hear from AMZN in the Consumer Discretionary / Cloud sector – after the bell tonight, Tech with FTNT, TEAM, RBLX, and MSTR - all important reads on spending, margins, and AI budgets.

Financials - ICE and KKR, SHEL will represent energy while ILMN will speak to healthcare. Fintech will be on display with AFRM, and industrials will be represented by B. Bottom line — it’s a broad slate, but guidance from tech and the consumer is what the MOMO guys are focused on.

The S&P closed at 6,882, down 35 points, after trading down and through trendline support near 6,860 to an intraday low of 6,838. Look, it feels like a DeepSeek or Tariff Tantrum moment: anxiety is high, nerves are shot, and the noise is deafening — and in my view, it’s overdone. Remember how many people called those episodes the beginning of the end? Yeah… how’d that work out? This is the moment to keep your head on straight — it’s not the time to panic. For the long-term investor – this is the time to go shopping – so much is on sale!

Classic philly cheesesteaks – one of my favorites

These are a time-honored tradition….and if you make a good one – you are all set.

When I was a kid – it was all about how some people used Velveeta Cheese (which isn’t really cheese) or American Cheese to make the sub…. Now, I am a kid from Boston and that was NOT happening…. we always used Provolone cheese – in my mother’s pizza shop! But that’s another story!

Now for this you need – Onions, Sweet bell Peppers, Mushrooms, Provolone Cheese (or whatever you prefer), olive oil, s&p, the submarine roll and of course the steak.

Now we would use sirloin, and we would freeze the meat and then while it was frozen we would slice it ‘paper thin’ on the slicing machine….it works best when the meat is frozen, otherwise you’ll never get it as thin as it needs to be.

Begin by sautéing your veggies in a bit of olive oil until nice and soft and – season with s&p.

In another pan – add a bit of olive oil and add the steak – season with s&p and cook until all browned.

Now from here you can go two ways. You can add the steak to the other pan and mix well, then lay the provolone cheese slices on top and let it melt into the pan and then using a spatula place it in the sub roll.

OR

You can open the submarine roll – lay the provolone on the roll, so that it goes up both sides of the roll. Like 3 pieces – overlap them. Then place the steak and veggies on top – the heat from the meat – will melt the cheese and BANG – you’re done.

I can just taste it now. OMG! So good!

Now some people toast the rolls in the oven – Not me, I just eat it fresh and soft.