Stocks closed sharply lower yesterday with all of the indexes down by -1.60% or more. The small-cap cap Russell 2000 and Nasdaq were the biggest decliners giving up -2.77% and -2.29% respectively.

There was no new news per se, weighing on stocks. Same old worries as before, including concerns over tech and AI. The so-called tech selloff, which began last week, carried over into this week.

For context, the tech-heavy Nasdaq is still the winner, so far, with a YTD gain of 18.4%, while the S&P, which also has a large share of tech, is up 14.6%.

But there indeed has been some paring of tech names.

Although, there's been some profit taking across the board. The Russell 2000 is up just 6.85% YTD, but was up as much as 13.0% just a few short weeks ago.

Yet, I am reminded that stocks have ordinary pullbacks throughout the year.

Pullbacks are defined as a decline between -5% and -9.99%, and they happen on average of 3-4 times a year. Simply put, they are very common. Every bull market has them. But if you know these are commonplace moves, you can instead look at them as opportunities to buy rather than places to sell.

Currently, the Dow is off -1.65% from their high close from the other day. The S&P is down -2.23% from their high close a little more than 2 weeks ago. The Nasdaq is down -4.54% from their high close 2 weeks ago. And the small-cap Russell is down -5.45% from their high close.

Personally, I see this pullback as a short-term pause before the next leg up.

As I mentioned the other day, the AI trade is alive and well. And will likely be one of the key drivers for stocks, not only for the remainder of this year, but for years to come.

And, like the dot-com tech boom in the late 90's, I see the same thing happening now with AI.

Back then we saw 5 years in a row of 20%+ gains for the S&P. From 1995 thru 1999, it was up 34.1%, 20.3%, 31.0%, 26.7%, and 19.5% (I'm rounding up that last year). That's 5 long, glorious years of gains (a 220% increase).

Fast forward to the present: we just saw 2 years in a row of 20%+ gains (2023 was up 24.2%, and 2024 was up 23.3% -- the last time that happened was 1995 and 1996, which was then followed by 3 more years of 20%+ gains). I see that happening again. Three more years of 20%+ gains, with AI driving this tech boom.

As for the remainder of this year, Q4 is the best quarter for stocks. And with it being a post-election year, there's a 72.2% likelihood of being up in November, and a 77.8% likelihood of being up in December.

In the meantime, we've got another week's worth of earnings. There's another 80 companies on deck to report today, and then another 337 next week. But Wednesday, 11/19, will essentially mark the end to earnings season when NVIDIA reports after the close.

With one more day left in the week, most of the indexes are in the red, except for the Dow, which is still in the green for the week. Actually, the S&P is in the green as well, but with very little margin to spare.

We'll see if the market can regroup today.

Either way, I'm still expecting a strong finish for the moth and the year.

Best,