How I analyze the plunge in tech and the markets

The markets have plunged 11% since October, and everyone is crying crash. But what’s really going on behind the scenes? In fact, after 18 months of hard work on my new projects, I’m thrilled to be back with you for an update. Today, we’re going to dissect this brutal drop in the tech giants and figure out where the money is going. I’ll share my analysis of the situation, from the US indices to Bitcoin, and even oil.

Doubt sets in regarding technology

Since early October, the Nasdaq has lost nearly 11%. This is what we call a creeping crash. Essentially, it’s a massive wealth destruction, but a rather quiet one. The real reason? Investors are doubting the profitability of artificial intelligence.

Let’s take Apple, for example. They sell tons of iPhones. It has become a mass-market product sold at luxury prices, and people are willing to go into debt to buy one. Yet, their profit margin is slightly declining. We went from an expected 46.9% to a forecast around 45%. On a €1,000 phone, that might seem like a mere detail. But scaled up to hundreds of billions of dollars, the difference is colossal.

It’s the same story for Amazon. Their Cloud division is exploding by 39%, but they are spending over $40 billion to stay in the race. Because of this, the question arises: how long can this debt-driven growth hold up?

My 3 observations on capital movements

Facing this tension, here is how the market is structured today:

1. The flight to safe rates: Money is leaving tech stocks like Alphabet and Intel. Investors are taking their profits and securing their capital in US government bonds. Lending to the state for 10 years with a solid yield is reassuring.
2. Europe’s revenge: While the Nasdaq is tanking, the DAX and the CAC 40 are holding up incredibly well. The cash freed up from American giants is finding opportunities right here with us. It’s a great show of resilience from our industrial stocks.
3. The end of traditional safe havens: Gold has lost nearly 20%; the bubble has burst. And Bitcoin? After breaking through 80,000, the hack of a major platform cooled everyone down. With a 25% monthly volatility, it’s neither stable nor reassuring. In short, we still aren’t buying houses with cryptocurrency.

My strategy for dealing with the drop

On the Nasdaq, the trend is heavily bearish. All support levels are breaking one after the other. Therefore, whatever you do, don’t rush in to buy.

Personally, I’ve been scalping. I buy on very strong support levels, but I sell within less than 2 minutes. It all comes down to discipline and mental framework.

The important nuance: I’m waiting to see an upside breakout of the bearish trendline before genuinely positioning myself as a buyer again. An awesome scenario would be a nice drop down to 27,500 on Friday, followed by a genuine rebound. But be careful, this remains a probable scenario, not a certainty. You have to adapt to the market.

Conclusion: Some good news to wrap up

Let’s finish on a clear-headed and optimistic note. Oil approached $105, and then algorithms sold off en masse, causing prices to plummet by 10%. Geopolitical tensions are easing up a bit, especially with the ongoing discussions. Oil is continuing to flow freely.

In summary, a barrel under $100 is excellent news for the global economy. It gives everyone some breathing room and helps keep inflation in check. Stay cautious, maintain your discipline, and I’ll see you very soon for the next update.