The jobs report hasn’t even come out yet, and the market is already spooking itself. Wednesday’s rally on the election results lasted just one day before giving back all its gains, with all three major indexes posting their worst single-day performance since last April. Take the Nasdaq: its pullback from recent highs has now entered correction territory. AI, previously the most crowded trade, took the hardest hit, with some high-flying stocks posting sharply larger one-day losses. Money is fleeing far faster than fundamentals are changing.

My view is simple: this sell-off isn’t about jobs; it’s about valuations. The AI narrative has carried on for too long, and expectations have been set too high. At the slightest sign of trouble, investors naturally rush for the exits. For a while now, anything tied to computing power, models, or applications has seen its valuation soar—but many companies’ earnings haven’t kept pace with their stock prices. When interest rate expectations shift and risk appetite contracts, the first assets to get cut are the ones with “long duration, big stories, and distant cash flows.”

The real test comes when the report lands. If the data are strong, the market may worry that rate cuts are off the table, while rising Treasury yields would put pressure on valuations. If the data are weak, investors may fear a recession, dragging down earnings expectations. It’s a no-win situation: either way, you can find a reason to sell. So don’t rush to pick a sector right now—wait for the numbers. Among growth stocks, I care most about those that can generate their own cash flow, not those that raise money by telling a good story. Companies with stable operating cash flow, positive free cash flow, and growth that doesn’t depend on ongoing equity financing are the ones that can withstand valuation swings.

Also, liquidity is thinnest in the early morning hours, when things are most likely to go haywire. Spreads widen, stop-loss orders get triggered one after another, and a single wick can shake you out. There’s no harm in waiting until daytime to act. If you think I’m talking nonsense, take a screenshot and save it.