Friday’s Market Shock Wasn’t What It Seemed
Friday's sudden market reversal looked ugly on the surface, but several of the signals underneath told a very different story.
In this update, Garry Davis looks beyond the headline selloff to the bond market, volatility, market breadth and stock-specific money flows - while also examining what this week's earnings told us about AI demand and increasingly selective markets.
View our scoreboard of results here
Friday's move was abrupt, with short-term yields and the US dollar jumping as markets reacted to the Fed. Yet the longer end of the bond market was far calmer, the VIX fell into the 14s, hyperscalers held up and software remained resilient. That combination matters because it does not fit neatly with a broad, high-conviction risk-off event.
At the same time, earnings season is reinforcing another important shift. AI demand remains extremely strong, but the market is becoming far more demanding about expectations, valuation and execution. Strong results can still be punished when expectations have moved too far ahead, while capital continues to rotate towards the businesses and sectors where the evidence is strongest.
Key message
Do not confuse a dramatic price move with confirmation of a new market trend. Read the evidence beneath the indices, understand what the money flows are saying, and keep risk management tied to your purpose and timeframe. Volatility can create opportunity, but only if decisions are made from a plan rather than from the emotion of the day.
What you'll learn
- Why Friday's selloff looked more severe than several underlying market signals suggested
- Why earnings expectations now matter as much as the headline result
- What Nvidia and other results are saying about the strength of AI demand
- Why AI beneficiaries are broadening beyond the obvious technology names
- How to think about gold, silver, copper and resource volatility after strong runs
- Why purpose, timeframe, weightings and risk management matter more as volatility rises
For clear market analysis, portfolio guidance and a repeatable process across Australian and US markets, learn more about the Insiders Club.
If you prefer an individually managed account, learn more about Portfolio Manager.
Any advice in this video is general advice only. Neither your personal objectives, financial situation or needs have been taken into consideration. Accordingly, you should consider how appropriate the advice, if any, is to those objectives, financial situation and needs, before acting on the advice. Garry Davis (AR No:317590) is an authorised representative of Primary Securities Ltd (AFSL No. 224107).
Note to traders* The publishers of this material wish to disclose that they may hold stocks mentioned in their portfolios and that any decision to purchase those stocks should be made only after the purchaser has made their own enquiries as to the validity of any information in this material.
Past performance should not be taken as an indicator of future returns.
It must also be noted that trading in the stock market involves risk of losing money. Investors and traders can take numerous steps to mitigate such risks with a clear plan, clear targets and entry prices, and strong support from an experienced trader.
This approach underpins everything we do and is where we advise every member to start, and you have access to Garry to support you in creating a trading plan that suits your risk profile, timeframe and capital allocation.