The only red wave we saw today was in stocks.
The stock market had a defensive posture today. Fairly broad-based selling had the major averages stuck in negative territory and sporting sizable losses at the close which approximated their worst levels of the session. The disconcerting price action in the cryptocurrency market kept buyers sidelined, along with disappointing quarterly results from Walt Disney (DIS 86.75, -13.15, -13.2%) and a number of growth stocks like Affirm Holdings (AFRM 12.10, -3.54, -22.6%).
Market participants also digested midterm election results today. Some races remain too close to call, yet reports indicate the likely outcome is a split Congress that will lead to a legislative gridlock environment. That would make it near impossible to pass any additional tax hikes or major spending plans, which was the expected outcome going into the election, so there was a sell-the-news component behind today’s losses.
Energy saw profit taking finally. XLE was -4.8% and OIH was -5.2%.
The major indexes had been clinging to a somewhat narrow trading range, albeit in negative territory, until selling picked up noticeably in the cryptocurrency market and stocks took another leg lower. This followed reports that Binance walked away from a plan to acquire FTX.com. Bitcoin was down 14.0% and Ethereum was down 14.2% around the time the stock market closed.
The specter of margin calls, as crypto prices plunged, undercut the stock market, which is likely to be used as a source of funds to help meet those calls.
The S&P 500 fell below 3,800 today and was unable to reclaim that level, as bids fell by the wayside in a risk-averse market.
So, bottom line, just a crappy day.
My personal gut takeaway is that we were down more today because of the hysteria in the crypto market and NOT the election.
Remember that these lunatics that are neck-deep in crypto use stocks to margin.
Gridlock is usually good for the market and we will have that now.
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A year ago UPST was trading at $390, today, after earnings, it fell to $14.
I removed GLNG from the watchlist as a potential buy for now.