Yo Pit Crazies,

For all the talk of the Iran conflict, higher interest rates, oil prices, and credit risk, stocks got battered by something nobody saw coming.

Big tech is getting smacked, and but good.

QQQ 3 Month Chart

The Real Culprit Behind the QQQ Selloff

The Invesco QQQ Trust (QQQ), the ETF that holds all of big tech, got taken out to the woodshed. It's now down 10 percent from all-time highs.

I'm going to lay the blame at social media, where they lost a big lawsuit. To be honest, I think it's time Meta Platforms (META) and Alphabet (GOOGL) got whacked for bad behavior. It's ironic they don't get smacked for obvious censorship but for ignoring problems with kids accessing their platforms. I expect more lawsuits ahead.

The Bigger Problem: AI Spend Meets Reality

The bigger issue is how this AI thing plays out. All the Mag 7 rode to great heights on AI, and now the spend on chips is starting to bite.

Credit markets getting tight on loaning to hyperscalers (the massive cloud companies burning cash on data centers) to buy chips could put a crimp in Nvidia (NVDA), if that's even possible. This is the first day in a month that stocks sold off not on Gulf news, but on AI growth news.

I expect some of the bigger names to tickle 52-week lows soon. Microsoft (MSFT) isn't far away, and my scanner will eventually pick it up.

Meanwhile, the S&P 500 keeps making new lows. That won't stop until ships sail through the Strait of Hormuz.

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To Your Trading Success,

AG