The Nasdaq 100 is on the verge of its third 10% correction this year. Gianni Di Poce says the next leg lower could set up the best buying opportunity since late March.
He isn’t rushing in. His cash levels are the highest they’ve been since the start of the year.
Today is midterm election day. The S&P 500 has rallied since midnight without making a significant higher high.
Gianni still sees the index in corrective mode. He’d welcome a little more downside into next week.
The history explains his caution. The last two times the Nasdaq 100 posted three 10% corrections in one year were 2022 and 2018.
Both were midterm years. 2018 ended with the infamous Christmas selloff, and 2022 brought a bear market through the first 10 months.
Gianni frames the market’s choice plainly. Stocks are either in the late stages of one of the largest deleveraging events in decades or in the first leg of a bear market.
The Nasdaq already took out its early September low. The S&P 500 shows a similar break.
The Dow has held up far better. Gianni credits money from around the world flowing into US blue chips instead of AI names or the Russell 2000.
Tech has traded negative since the start of the third quarter. Healthcare pulled in tremendous inflows over the last week.
Biotech excites Gianni most. XBI is trading back where it was in early 2021 on a huge long term base.
The SOX looks very different. It sits on support in its fifth month of correction.
Here’s what Gianni broke down in tonight’s video:
- XBI sits on a massive base at early 2021 levels. Gianni traded biotech over the summer. He sees the theme coming back into play for the final two months of 2026.
- The July correction bottomed without a real VIX spike. This time the VIX already rallied above its late July and early June levels, which makes this pullback look more real.
- Biotech makes up about 20% of healthcare. Healthcare makes up about 10% of the S&P 500, while tech carries 34% of the index.
- US stocks have performed positively after each of the last 19 midterm elections.
Gianni sees a dot com parallel in that sector math. The equal weight S&P 500 kept running for almost another full year before everything rolled over into 2002.
He’s also watching crypto closely. Bitcoin is holding up while Solana dropped to a new low.
Crypto treasury companies and names around the mining space have corrected hard. Gianni says many now show decent setups.
A crypto rally would make it hard to stay fully bearish. Gianni expects the bulls to have the final say before the bears can claim a full bear market.
