The Nasdaq fell 6.4% in a single day, a sharp drop even by the standards of recent years. The last time it was this bad was March 2020. Back then, the pandemic shock collided with tight dollar liquidity, sending markets into a series of steep declines. Many high-quality assets were sold indiscriminately until the Fed slashed rates and restarted monetary easing, and the sell-off gradually began to ease. So I’m more inclined to see this downturn as a systemic valuation reset amid tightening liquidity, rather than a problem with any one company. I don’t think this correction is over, but I’m not going to bet on a rebound in Nvidia. Even a stellar earnings report can’t withstand the whole market getting hammered: earnings are one thing, liquidity is another. An earnings beat can show that a company’s fundamentals are strong, but when investors are collectively deleveraging, ETFs are seeing redemptions, and institutions need to sell their most liquid assets for cash, even the best results can get sold off first.

I’ve learned the hard way that it’s not always easy to tell a real breakout from a fake one. I used to chase a stock when it surged above its previous high on heavy volume, only to see it fail to hold for three days and fall straight back into its range on the fourth. In hindsight, it was just a false move. Later, I set a rule for myself: a move above a previous high on heavy volume isn’t enough; if it can’t hold for three days, it’s usually a fake breakout. A real breakout needs to pull back without breaking below the previous high. For example, if an index breaks through a key level and then retests it, it’s worth following only if the previous high turns from resistance into support and volume hasn’t contracted significantly. By contrast, if there’s a lot of excitement on the day of the surge, volume dries up and the index pulls back the next day, then it breaks below the breakout level on the third day, I’d rather miss it than chase it.

Tonight’s employment report at 9:30 is the main event. There are 33 days until the Fed’s December 9 decision, and once this data comes out, rate-cut expectations, the dollar, and Treasury yields could all be repriced. The direction could change. Also, liquidity is thinnest in the early hours, making it easiest for sudden wicks to form. With few limit orders and wide slippage, a single wick can trigger your stop-loss, so don’t chase the market then. No need to rush to a conclusion—let’s see how things unfold.