Market Commentary provided by our CEO/CIO, Mark Sorensen.
The market is selling off hard on concerns about the AI trade and data center buildout related to the mid-term elections. Semiconductors and memory among other tech sectors, are being liquidated regardless of price, even though 3rd quarter earnings have been generally strong. The Nasdaq100 has breached the July lows and it is looking like pure capitulation as “the baby is being thrown out with the bathwater”. During times like this, it is best to look past the volatility and ignore it if you have to, emotional decisions usually lead to regret given some time. We are seeing signs of non-discriminant selling which often indicates a bottoming process beginning. These signs include the Nasdaq100 entering an oversold condition, the put/call ratio hitting the worst level for the year, and the market completely discounting the strong underlying fundamentals.
Since 1998 after the mid-term elections, from October 9th to July 17th, the S&P500 has averaged 19.1% and was up 100% of the time. That does not imply a smooth line. During one of those instances, the market corrected 18.7% but was still higher by the following July. Since 1982 post the mid-terms, the market was up a year after the elections and averaged 13.7%, and averaged 15% when the mid-terms created gridlock in Washington, meaning the legislative and administrative branches being held by opposing political parties.
Corrections happen. Patience has always been rewarded when you stay the course and look six to twelve months out. We understand the frustration and emotions are real, but the market always recovers in time and we remain bullish given the underlying fundamental backdrop.