| | | | Gold Bugs Going Long
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter!
The gold trading computerized trading algos are leaning heavily toward one side. Is it bullish or bearish? The tariff panic didn't last long, as I expected.
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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Forget Tariffs — It’s Overvaluation That’s About to Bite Traders
Everyone’s pointing fingers at tariffs for the recent sell-off, but let’s getreal — tariffs are just the convenient headline. The real story? Overvaluation.
The market has been running on fumes for months now, and traders are finally waking up to it.
We’re looking at sky-high forward earnings, record valuations and price levels that have been screaming for a correction. This isn’t about some new tariff announcement catching anyone off guard.
How many of you actually made trades based on tariffs? I’ll bet not many. The bigger players — the hedge funds, the bots — they aren’t reacting to trade news.
They’re reacting to bloated valuations and technical signals that have been flashing red for weeks.
Valuations Can’t Defy Gravity Forever
Look at the numbers. Forward earnings multiples are at record highs across multiple sectors. The Technology sector (XLK) has been leading the charge, but even more defensive areas like Consumer Staples (XLP) and Utilities (XLU) have been getting stretched.
This isn’t sustainable. The market doesn’t need an excuse like tariffs to correct — it was overdue regardless.
When you’ve got the S&P 500 (SPY) pushing record highs with earnings growth that can’t keep up, you know a pullback is coming. It’s not a matter of if, but when.
And when it does come, it’s going to be vicious.
The Correction Is Here — And It’s Just Getting Started
We’ve been watching the signs. Stocks have been grinding higher, but with less and less participation. Breadth indicators like stocks above their 20-day moving average were flashing warnings before the sell-off even started. And now, here we are — the pullback is unfolding just like I expected.
This isn’t about panic over tariffs or political headlines. It’s about the natural ebb and flow of the market. Traders got complacent chasing momentum, thinking the market could defy gravity forever.
But nothing goes straight up.
Now if you’re waiting for the market to bounce back overnight, you might be in for a surprise. This correction has legs. We could see deeper pullbacks across sectors, especially in overextended areas like Technology and Consumer Discretionary.
But corrections aren’t just about losses — they create opportunities.
If you’ve been sitting on the sidelines waiting for better entry points, this is your chance. Just be patient. Let the market do its thing. The worst thing you can do right now is chase a dead-cat bounce.
In the end, forget the tariff headlines. The real driver of this sell-off is simple: Valuations got out of control, and now the market is doing what it always does — bringing prices back to reality.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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