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Good morning:
Before we start… There are a few technical difficulties this morning in the world of cloud computing that are disrupting our preparations for the show. So… if you click our links and you don’t see me… It’s obviously some tech giant not wanting me to tell you the ugly truth about this market…
To ensure that you’re prepared for today’s trading session…
I’ve written a lot this morning… to prepare you for today…
We're staring down the barrel of another ugly session, and yesterday's weakness has metastasized across global markets overnight.
Asian indices got hammered - Tokyo and Seoul both down 3% - while Bitcoin finally cracked below that critical $90,000 level before finding some temporary footing.
The only safe harbor right now is bonds, with the 10-year Treasury yield pulling back to 4.11% as money flees risk assets.
The internals tell you everything you need to know about where we stand.
Our S&P intraday pressure gauge sits at minus 64 this morning - that's deep stress territory.
We've got zero breakout names in the index. Zero.
I stress that when we get down into Zero territory, we tend to see wild swings and the possibility of short squeezes…
Meanwhile, breakdown counts keep climbing. When you see this kind of lopsided action, it's not a correction anymore - it can be a liquidation event in slow motion.
This is exactly when our momentum tools matter most.
When everyone crowds to one side of the boat, you start watching the other side because that's where opportunity eventually shows up.
Sector Momentum: Deterioration Everywhere
Last week's sector performance paints a grim picture, and Monday made it worse.
Energy is yellow on our momentum readings, but it's hanging by a thread. Healthcare is holding… but it’s likely to face challenges too…
Everything else has turned red, and the selling pressure is accelerating in the most important areas.
Technology took the biggest hit, and that matters because tech drives this market. Nvidia dropped over 6% for the week, Apple slipped, and names like Broadcom and Lam Research faced relentless pressure.
The communication services sector got crushed too - Meta down more than 4% as the larger platforms all struggled. This isn't just a rotation out of growth; this is systematic deleveraging in the most crowded trades.
Healthcare was the lone bright spot, finishing up 2.7% thanks to strength in Eli Lilly, Johnson & Johnson, and the broader pharmaceutical complex. It's the only sector where buyers have shown any real conviction. Consumer defensive names held flat, with small gains in Walmart and Pepsi, but the momentum signal remains red.
Financials got destroyed.
JPMorgan fell more than 5% for the week, and regional banks continue to search for any kind of footing. When banks can't catch a bid in a rising-rate environment, it tells you something fundamental is broken in the credit transmission mechanism.
Industrials, materials, and consumer cyclicals all remain deep in the red. Tesla collapsed more than 8%, while retail and travel names trade like they're pricing in a consumer recession.
The Big Three Stories for Today
The Nvidia Crucible
Tomorrow's Nvidia earnings have become the ultimate stress test for this market.
The $5 trillion chip giant sits at the center of the AI investment thesis that's driven markets for two years, and the anxiety is palpable.
Peter Thiel's hedge fund dumped its entire Nvidia stake during Q3 - that's not exactly a confidence booster heading into the quarter.
But here's the real issue: Nvidia carries 8% weight in the S&P 500 and roughly 10% in the Nasdaq 100.
When a single stock can move entire indices, you're dealing with concentration risk that goes far beyond normal market mechanics. Analysts expect a 53.8% year-over-year earnings jump on revenue of $54.8 billion. Those are massive numbers, and any disappointment will ripple through the entire tech ecosystem.
The broader concern is leverage.
Amazon just launched a $15 billion debt offering - its first in three years - which tells you something about funding conditions and cash flow needs in big tech.
When you see growing demand for credit default swaps on leading tech names, that's not speculation about AI's future.
That's systematic hedging of massive concentrated exposure.
Private Credit Cracks
Blue Owl's decision to block redemptions from one of its private credit funds ahead of a merger is sending shockwaves through alternative credit markets.
The stock fell 3% in premarket trading, but the real story is what this says about liquidity stress in private markets. When you can't get your money back from a credit fund, that's not a temporary inconvenience - that's a structural problem.
This matters because private credit has become a massive repository for institutional capital over the past decade.
Pension funds, endowments, and sovereign wealth funds have poured hundreds of billions into these strategies, chasing yield in a zero-rate world. Now that rates have normalized, the entire sector faces a reckoning.
Blue Owl isn't just one fund having problems; it's a canary in the coal mine for an entire asset class built on cheap money and endless liquidity.
The Repo Stress That Remains Clear
Repo market stress is STILL HERE, and it's driving the technical breakdown we're seeing across risk assets.
The funding markets remain tight and fragile, but you won't hear analysts discuss it because acknowledging repo problems could trigger broader panic.
Corporate borrowers are active again - Amazon's bond deal yesterday drained short-term liquidity just when the system needs it most.
Crypto weakness is your early warning signal; when cash becomes scarce, the riskiest corners of the market react first. Bitcoin's break below $90,000 isn't just technical selling - it's forced liquidation driven by funding stress.
The 10-year yield, near 4.13%, keeps the entire environment tight, but the real problem is uncertainty.
With delayed economic data, mixed Fed commentary, and heavy Treasury issuance still working through the system, nobody has a clean read on where bank reserves actually stand. That lack of clarity keeps liquidity providers cautious and markets on edge.
The Trading Setup
Today will be an active open.
We could see an initial drive lower, maybe even a push into the fourth standard deviation of VWAP.
If we get that kind of flush early, that might be the only clean bounce opportunity of the day - a quick pop back into broken support before sellers regain control.
What matters now is whether this remains a controlled, stair-step selling program or whether we finally get the sharper downside washout that tends to wake up algorithmic buyers and spark a real rebound.
Heading into Nvidia earnings, that flush-and-reversion setup is still on the table. A fast shakeout followed by a 24- to 48-hour rally into earnings would fit the pattern we've seen in previous high-stakes reporting cycles.
The job right now is simple… protect capital, stay patient, and get ready for the turn when policy finally steps in. When moves get this one-sided, the opportunity will eventually show up on the other side. But timing that turn requires discipline and the right tools to read momentum shifts as they develop.
The next few days will set the tone for the rest of November.
I’ll see you soon,
Garrett Baldwin