Yesterday’s market action was a stark reminder of the unpredictability of the stock market. The NDX plunged by an astonishing -6.36%, its worst day since March 9, 2020, with the S&P 500 following closely behind with a -4.36% drop. This is the worst day for both indices since the height of the Covid-19 pandemic. The NASDAQ VIX, a gauge of market volatility, had its biggest one-day move since the Covid crisis, and is now back near pre-Covid levels. The VVIX, a measure of the volatility of the VIX, saw a massive 45-point increase, with only the Volmageddon event in 2018 surpassing it in terms of one-day gains.

The tech sector was particularly hard hit, with the High Beta Momentum index plummeting by -6.2%, its worst drawdown in over 10 years. The SOX, which tracks the semiconductor industry, suffered a -12% drop, its worst day since 2020. ETFs also saw a significant increase in volume, with 32% of trading volume occurring on the exchange.

The launch of ChatGPT, a popular AI-powered chatbot, may have contributed to the sell-off in AI-related stocks, as many of these baskets experienced their biggest down day since the chatbot’s launch. Futures closed below the medium-term CTA threshold (7549), indicating that investors may be bracing for more supply in the near future.

The market’s sudden shift in sentiment is a reminder that investing in the stock market can be unpredictable and subject to sudden changes. It is important for investors to remain vigilant and adapt to changing market conditions to avoid significant losses.

In conclusion, yesterday’s market action was a red-hot reminder of the importance of diversification and risk management in investing. While the tech sector and high beta momentum stocks took a hit, it is crucial to remember that the stock market is inherently unpredictable and can be affected by a wide range of factors. As always, it is important to stay informed and adapt to changing market conditions to maximize returns and minimize losses.