Things You Need to Know
- Thursday’s Market Hangover – META Takes the Blame.
- The “Hindenburg Omen” flashes.
- Investors don’t panic, they prepare
- Bonds down, Yields Up, Oil Flat and Gold churns.
- Try the Frittata di Patate
Wednesday brought us the FED announcement and earnings from three of the Mag 7 superstars — and then Thursday delivered the reaction. Investors, traders, and the algo’s had a night to sleep on JJ’s tone — what he said, how he said it — and to digest results from META, MSFT, and GOOG.
By morning, the verdict was in: stocks had gotten a little ahead of themselves. Time to ring the register.
Futures were soft ahead of the open, and once the bell rang, the algo’s went into sell mode — dragging stocks lower. By the end of the day, 8 of the 11 S&P sectors were in the red.
META was the clear culprit — plunging 11% after earnings as investors started to question rising expenses (do those billion-dollar pay packages concern anyone?), AI spending, and a softer ad-revenue outlook. That move alone set the tone for the day and sent tremors through the rest of Big Tech.
MSFT lost 3% as investors questioned growth momentum and cloud margins, while GOOG managed to buck the trend and close higher on solid search and AI demand. AAPL ended unchanged, AMZN lost 7% ahead of their reports, and NVDA slipped as profit-taking hit the chip space. In the end, almost anything tech was being sold hard — buyers stepping aside, waiting to take advantage.
The XLK lost 1.2%, ARKK – 4%, SOXX – 1.3%, BOTZ – 2%, ARKW – 4% — see the pattern?
The Dow gave up 110 pts or 0.25%, the S&P down 68 pts or 1%, the Nasdaq fell 378 pts or 1.6%, the Russell lost 18 pts or 0.75%, the Transports rose 142 pts or 0.9%, the Equal Weight S&P gave up 30 pts or 0.4% while the Mag 7 took it on the chin – giving up 945 pts or 2.7%…..
And that makes sense, no? Yes, it does. It wasn’t a disaster — just traders and algo’s reacting to the headlines, because that’s what they do. Long-term investors respond only to the key headlines before making dramatic changes.
In fact, long-term investors were likely buyers yesterday in names that got whacked — think tech.
Now About That Divergence – Does the ‘Hindenburg Omen’ Mean Anything?
Recall how we’ve been talking about the divergence between the S&P 500 and the Equal Weight S&P 500. The headline index keeps advancing — thanks to the outsized contribution of the Mag 7 — while the equal-weight version has been quietly drifting lower.
Yesterday we got another technical signal that caught some attention — and to be fair, it’s controversial, so take it with a grain of salt. It’s called the Hindenburg Omen.
This omen, when triggered, flashes a warning that the market could be setting up for a significant decline within the next two or three months — which lands us around January 2026, a new year, a new quarter, and maybe a new tone for markets.
And to be clear — I don’t think stocks correct significantly before year-end… but January 1st? That’s another story.
Here’s what the omen requires:
A large number of stocks hitting new 52-week highs,
A large number hitting new 52-week lows at the same time,
The overall market still trending up, and
The McClellan Oscillator (a measure of market breadth) turning negative.
When that happens, it signals unhealthy breadth — momentum is waning even as the index climbs.
Is it perfect? Absolutely not. The Hindenburg Omen has a long history of false alarms — so don’t go lighting your hair on fire. But it’s worth noting, because it speaks to the growing fragility beneath the surface — and you’ll hear some analysts talking about it.
So What Does That Mean for Investors? You don’t panic — you prepare.
When you see technical warnings like these — coupled with narrowing breadth and market exhaustion — it’s a flashing yellow light: proceed with caution.
And this is exactly what I’ve been saying all along — there’s no need to chase names that are already extended. If you own them, you’re participating. If you didn’t own them yet, yesterday was a good day to dip your toes.
In the end — you manage your risk. Trim the names that have run too far, raise a little cash on the edges, or add to the under-performers to rebalance. It’s all about discipline.
Watch for rotation — value, dividend payers, cyclicals, and quality balance-sheet names tend to attract attention when growth gets stretched — themes we’ve been talking about for months.
Stay a long-term bull, but recognize the short-term risks — risks that can become opportunities. Capisce?
What it does NOT mean is that you bail on everything and hide in CDs or Treasuries. Stay aware of where we are in the cycle — so you’re not surprised when volatility hits, and you’re ready to scoop up good stocks when they go on sale.
The Rest of the Story
The VIX isn’t sounding any alarms — still hugging the trendline at calm levels. But we know how that can change on a dime. It ended unchanged yesterday and is down 4% this morning — why? Because futures are trading higher.
The Nasdaq, which got beaten up yesterday, is up 1.2% pre-market — thanks to AAPL + 1.8% and AMZN + 12.8% after strong reports.
Bonds continued to get sold — TLT – 0.6%, TLH – 0.4%, AGG – 0.2%. The 10-yr yields 4.10% (+3 bps) and the 30-yr 4.66% (+4 bps).
Gold found dip-buyers — up 2.4% (+ $95/oz) to close at $4,024. It’s stabilizing above $4,000 — a short-term support level. The broader trendline sits near $3,820, not out of the question depending on how the paparazzi (Fed speakers) sound over the next couple weeks.
Oil continues to consolidate around $60, holding the $55–$62 trading range.
This Morning U.S. futures are mixed: Nasdaq + 1.2%, S&P + 0.9%, Dow – 22 pts, Russell – 5 pts. The excitement is all AAPL and AMZN, neither disappointed — and investors are loving it.
AMZN blew the roof off, reporting the fastest cloud-unit growth in three years — sending the stock up 12.7% and adding roughly $300 billion in market cap. AAPL rose 1.8% on a revenue beat and optimism around holiday sales.
It’s Friday after a big week of earnings. Today, we’ll get only a handful of names — CVX and XOM in focus. CVX beat and is + 0.6% pre-market; XOM is – 0.4% ahead of their report.
European markets are mostly lower — except the Mother Land (Italy) + 0.4%. The UK – 0.5%, Germany – 0.5%, France – 0.3%, Spain – 0.2%. The ECB economy grew 0.2% in Q3, slightly beating estimates, and rates remain steady for a third straight meeting.
The S&P closed at 6,822 – down 68 pts, right on the lows of the day. This morning’s action suggests some divergence — keep an eye on the S&P vs the Equal Weight; that’s where you’ll see what’s really happening under the sheets.
Countdown
31 days into the Gov’t shutdown — and it’s getting HOT in here.
29 days until Official Black Friday
55 days until Christmas
61 days until the ball drops in Times Square
Let’s review your plan. Call me for a complimentary, no-obligation portfolio analysis: 561-931-0190.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.
Fritatta di Patate – Potato Frittata!
Classic feel-good food.
You need – peeled and cubed potatoes, eggs, parmegiana, olive oil, s&p.
Begin by heating up some olive oil in a large sauté pan. Add in in the potatoes – enough to cover the bottom of the pan. Season with s&p. Let them cook for 15 – 20 mins or until the potatoes begin to take on some color around the edges. Make sure to mix, so they cook all over.
While the potatoes are cooking – crack 6 eggs into a bowl.
Season with s&p – Beat the eggs. Now add in a handful or two of fresh grated Parmegiana – mix well.
Now – spread the cooked potatoes evenly. Lower the heat to low. Pour in the egg mixture so that it spreads thru out the pan. Cover and cook for 5 – 8 mins on low. Remove the top – are the eggs firm? If not – cook for a couple of more minutes…. If they are then –
Carefully – shake the pan side to side to make sure it is not sticking. Carefully slide it onto a large plate.
Now – take your sauté pan and place it on top of the plate and flip it so that the top is now on the bottom. Return it to the stove and cook for another 3 – 4 mins…
You want the color to be nice and golden. Once done – slide it back onto the plate and cut it up like a pizza and serve. This is great anytime of the day!
Buon Appetito!