Goldman's momentum basket had its worst day since 2022. AI stocks crushed. And everyone's asking 'what was the catalyst?' That's exactly the problem...
| | | People keep saying "there's no smoking gun" for this week's tech crash. | That IS the smoking gun. | We just witnessed one of the worst momentum days in 25 years. Goldman Sachs momentum basket fell 7.6% - its worst day since 2022. The VIX hit 20. AI beneficiaries down 6.5%, AI power down 6.7%. | And everyone's scratching their heads asking "what was the catalyst?" | The catalyst is mechanical and structural selling in the market. | These are the things that go undetected. This is why having momentum analysis matters - it's not just about headlines and catalysts, it's about understanding flow. | Morgan Stanley estimates roughly $18 billion in equity supply from leveraged ETF rebalancing happened yesterday alone. We've been talking about leverage in the system needing to unwind, pressure in repo and financial markets, concerns about collateral. | All of those things are extraordinarily relevant, but they don't hit the CNBC headlines. They don't get into the national narrative. | | Must Watch: Tonight at 7 pm ET: | | | So you watch this stuff fall and you hear "no smoking gun." But there IS a smoking gun - it's called forced selling. | KKR fell 10% the other day. People said "there's not really a catalyst." There is a catalyst. It's structural unwinding that has to happen regardless of fundamentals or news flow. | This is all about flows, and it's not over. | Both Goldman and Morgan are saying historically momentum dips like this are good buying opportunities medium term. But they're actually saying sit this one out right now. | Even more concerning: the speed of this type of momentum move historically has lasted at least a month. The median downturn is 22% - median, not average. | When you hear "no catalyst," that should terrify you more than any headline. Because it means the selling isn't driven by fixable problems or temporary news. It's driven by mathematical necessity. | Leveraged positions have to unwind. | Margin calls have to be met. Collateral requirements have to be satisfied. This stuff doesn't care about your fundamental analysis or technical support levels. | The beauty of this - if you want to call it that - is that mechanical selling creates the most violent moves. Because there's no discretion involved. No waiting for better prices. No "maybe tomorrow will be different." | Just math. Cold, brutal, unavoidable math. | I'm tracking these flows and mechanical pressures live in the TheoTrade chatroom as they develop. | When you understand it's not about finding the news catalyst but recognizing the structural forces at work, you can position for what comes next instead of getting caught asking "why did that happen?" | Because in this market, the most dangerous crashes are the ones that happen for "no reason" at all. | Stay Positive, | Garrett Baldwin |
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