SELL OFF HAS STARTED! Is STOCK MARKET Going Bear?

$SPDR S&P 500 ETF Trust(SPY)$ $Palantir Technologies Inc.(PLTR)$ $Hims & Hers Health Inc.(HIMS)$ $SUPER MICRO COMPUTER INC(SMCI)$

Market Overview and Volatility

The market sell-off continued on Friday, and now, as we move into Monday, we’re seeing another red day. However, as you can see, not every stock is down—many companies, particularly those outside the tech or AI sectors, are actually in the green.

If you didn’t question why your stocks were soaring year-to-date or over the past few months, you probably shouldn’t be overly concerned now that they’re pulling back. If your stock has climbed 50%, 70%, or even 100% this year—or 300% in just three months—it’s not surprising to see a 10-15% drop in a week. That kind of unsustainable rally was bound to correct at some point.

Now, the big question is: Is this a buying opportunity, or will the market drop further? The truth is, no one knows. We could see a rebound tomorrow, or stocks could continue their decline. The key takeaway here is a reminder from Warren Buffett: a true investor welcomes volatility.

Current State of the Market

As of now, this is the state of the stock market: The sell-off from Friday has carried into Monday, with many stocks in the red, but plenty still showing gains. If you zoom out, you’ll notice that despite the recent drop—say 10-15% in a week—many stocks are still up significantly year-to-date, often by 20-50%. Looking at the last three months, some stocks have even doubled.

Yet, few investors question rapid gains. When a stock surges, people celebrate. But when it declines, suddenly, everyone is asking why. The real question should be: Did anything fundamentally change in the business? If the answer is no, then what’s happening is simply a natural correction. Perhaps the stock was overvalued, and the market is now adjusting. If nothing has changed with the company itself, you’re essentially getting the same business at a lower price—a scenario most investors should welcome.

Insights from Tom Lee

I also want to touch on Tom Lee’s comments from last week. Investors are growing concerned about a slowing economy, with the Dow and S&P 500 having their worst sessions of the year. The market is also down for the month of February so far. Despite this, Lee sees a contrarian bullish signal.

His key point? The market has avoided prolonged weakness because investors remain skeptical at market highs, while record amounts of cash sit on the sidelines. This skepticism, along with concerns about tariffs and economic uncertainty, creates a "wall of worry"—which, historically, has been a bullish setup for stocks.

Economic Data and Market Sentiment

Some might point to economic data, such as the recent University of Michigan consumer sentiment reading, which showed broad declines across income and wealth groups. Inflation expectations have also ticked higher. But does this signal an impending slowdown?

Before he answered that, I was blown away by his perspective. Many of these surveys are heavily influenced and shouldn’t always be taken at face value. If you haven’t heard what he said, his insights might surprise you as well.

Remember, at the end of 2024, Lee predicted that the first half of 2025 would likely be strong for the stock market, while the second half could be more turbulent. Why? Because by then, the market may start questioning whether AI, economic growth, and other key drivers are truly delivering on their promises. Are things going as planned? If not, we could see increased uncertainty in the latter half of the year.

Of course, you could argue that similar concerns are affecting the market right now—tariffs, AI demand, earnings, and overall sentiment are all in play. The question remains: Is this just a temporary dip or the start of something bigger? Only time will tell.

Inflation Expectation Surveys and the Fed's Perspective

Now, let’s dive into the answer. Inflation expectation surveys matter to the Fed because they indicate whether consumers are adjusting their expectations for future inflation. If expectations rise, it could be problematic. However, it's important to recognize that these surveys appear to be heavily influenced by political affiliation.

When you break down the responses, Democrats who previously estimated inflation at under 2% before the election now perceive it to be over 5%. Meanwhile, Republican respondents have shifted from an inflation expectation of around 4% to nearly zero. In fact, among Democratic respondents, almost 7% believe inflation is currently at 25%. This highlights a significant degree of bias in the data, which is likely a common occurrence during a change in administration. Hopefully, the Fed is aware of this political dynamic and takes it into account.

Personally, when I see these kinds of discrepancies, I find it difficult to take these surveys seriously. Hopefully, the Fed has access to much more reliable data.

Fed Meeting Outlook and Market Reaction

Looking at the Fed Watch tool, the next Fed meeting is in 23 days, and as of now, there is no expectation of rate cuts. In fact, there is a 95%+ probability that rates will remain unchanged.

Stock Market Performance

Now, shifting to individual stocks, the biggest decline today is in Palantir, which is down 8%. Other notable drops include Shopify, Uber, and Celsius, all down more than 2%. However, not everything is in the red—Apple is up following the announcement of its plan to invest $500 billion in the U.S. over the coming years. Google (Alphabet) is also in the green, reportedly after securing a Google Cloud contract from Salesforce. Disney and The Trade Desk are showing slight gains, with The Trade Desk up 1% after taking a significant hit following its earnings miss—the first in eight years. Although it's still not the cheapest stock out there, today’s rebound is notable. Lemonade is also up 1.74%.

Chinese Stocks Under Pressure

Turning to Chinese stocks, Alibaba is down 9.43% today. Despite this drop, the stock had already surged 60% year-to-date, making it a strong performer even after today’s pullback. Alibaba also recently announced a $50 billion+ investment in data centers and AI, a move that the market seemingly didn’t like. However, from an investor’s perspective, this mirrors the capital expenditure trends of American tech companies and is likely a necessary step for future growth. Pinduoduo is also down 8%, adding to the weakness in Chinese stocks today.

Fintech Sector Performance

Among fintech names, Affirm and Robinhood are both down 4-5%, SoFi is down 2.7%, and Block is down 2.68%. Meanwhile, Adyen and Shift4 are mostly flat, while PayPal is slightly in the green. Nu Holdings (Nubank), after plummeting 18% last week following its earnings report, is rebounding today, up 5.13%.

Semiconductor Stocks

Looking at semiconductor stocks, most are in the red except for Applied Materials and ASML, which are managing to stay positive. Super Micro Computer (SMCI) faces an important deadline tomorrow—Tuesday. If the company fails to file by then, it risks being delisted once again.

Short-Term Bets and High-Volatility Stocks

Lastly, among short-term bets and highly volatile stocks, Viking Therapeutics is down 11%, possibly correcting after Friday’s rumors that Pfizer might acquire the company for $40-$50 per share. Nuburu is also down 8%, while quantum computing and space-related stocks are seeing significant declines as well.

Bright Spots in the Market

On the upside, TransMedics is up 3.86%, DLocal is up 1%, and IonQ is up 0.5%. Latin American stocks, such as MercadoLibre, Nubank, and Nu Holdings, are showing strength today, even as much of the market remains in the red.

For those interested in Nike, analyst Jeff Konnick has come out with a strong buy recommendation, stating that now is the time to aggressively buy the stock. He believes Nike’s brand remains strong, and while past strategic missteps allowed competitors to gain market share, they were not enough to derail the sportswear giant. This confidence led Jeff Randall Konnick to upgrade the stock from "Hold" to "Buy" and raise his price target by 53%.

In a note to clients, Konnick explained:

“The new CEO is addressing product and distribution challenges head-on, positioning Nike to once again outgrow the market and reclaim lost market share.”

He also expects a V-shaped recovery in margins and EPS by fiscal 2027, well ahead of consensus estimates.

If you haven’t been following Nike’s earnings reports, the CEO has stated that the company’s recovery will take longer than expected. While some might see this as a red flag, others argue that the new CEO—who has extensive experience at Nike—may simply be setting low expectations to make his job easier. That said, regaining Nike’s dominance won’t happen overnight. This isn’t a software issue; it’s primarily a brand perception issue, though some may argue it also involves product strategy.

The analyst further emphasized:

“Nike’s brand ubiquity and global distribution advantages should enable it to outgrow the market. We project a 7% CAGR, compared to the Street’s 3% estimate. Market data also shows that over 50% of consumers planning to buy athletic footwear will choose Nike.”

After years of challenges and self-inflicted setbacks, Konnick believes new leadership will realign product strategy and restore balance between direct-to-consumer (DTC) and wholesale channels. His firm sees more than 50% upside from Nike’s current levels.

Nike’s Current Stock Performance

Nike is currently trading just above $80 per share, with a year-to-date gain of 6.67%.

Final Thoughts on Market Volatility

If you own stocks that are down today, zoom out and check their year-to-date performance. Many stocks that are taking a breather today have already climbed 30-50%+ this year.

If your stock hasn’t seen such gains but the business fundamentals remain solid—especially if it recently reported earnings that you found satisfactory—then you might just be getting a great buying opportunity. Volatility can work in your favor. Overreactions happen, but timing the bottom is impossible—unless, of course, you have a crystal ball (and if you do, I’d be willing to pay a lot for it!).

When I see a great company trading at a good price, I’m happy to buy when the market is red. It’s far better than chasing stocks when everything is green.

What I’m Doing Today

Am I buying anything today? No—I already did some buying on Friday As of now, I don’t see this as a major crash that would push me to buy even more aggressively. I’m still building my position in AMD, so I’ll probably add more if it stays under $110, and even more aggressively if it nears $100. Aside from that, I’m not making any major moves.

Advice for Panicked Investors

If you’re feeling anxious about the market drop, remember:

1. You can do nothing—sometimes, sitting tight is the best strategy.

2. You can buy more shares of great companies that are down due to macro factors rather than business fundamentals.

3. You can take a break—step away, get some fresh air, go for a walk. The stock market will still be there when you return, and let’s be honest, there are more important things in life anyway.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.