Liquidation

Thursday's market action felt like some forced selling was hitting the tape across various market sectors, and the leaders from the first half of the year are succumbing to heavy liquidation.

One word pretty much sums up Thursday’s market action: Liquidation.

Something is wrong out there, but it’s not entirely clear what it is exactly. However, one thing is clear: Beginning with Tuesday’s IBM disaster, the last few trading sessions have left a pile of bodies in its wake.

IBM (Daily)

The damage is spreading across a number of equity market sectors, and there is mounting concern that the “AI trade” is blowing up:

Micron Technology (Daily)

Sandisk (Daily)

Even Caterpillar (NYSE:CAT) has been hammered this week.

CAT (Daily)

The uranium sector looks like scorched earth:

Cameco (Daily)

NexGen Energy (Daily)

I read that 1.2 million Korean investors have been hit with margin calls in the last week, that equates to 1 in 30 working-age adults in South Korea.

Remember the SpaceX IPO and how Elon Musk was briefly the world’s first trillionaire?

Yeah, not anymore.

SpaceX (Daily)

On Thursday, SPCX’s share price closed below the IPO price for the first time ever as an avalanche of 1.4 billion shares are set to unlock by Christmas.

Meanwhile, the Nasdaq-100 (SPCX is now a constituent of this index) is on the brink of a confirmed chart-pattern top:

QQQ (Daily)

A weekly close below $700 in QQQ would be an ominous development, completing an 8+ week topping pattern, and projecting an additional 15%-20% of potential downside for U.S. tech stocks.

Canadian micro-cap stocks closed at a new 2026 low on Thursday, but the TSX-V Composite remains slightly above last November’s low at 838.

TSX-Venture Composite (Daily)

In the junior mining sector, we are even beginning to see stocks that have held up all year come under pressure in recent trading sessions. There are definitely mounting signs of investor capitulation hitting the tape.

A couple of small bright spots have been refiners and agriculture stocks:

Valero (Daily)

VanEck Agribusiness ETF (Daily)

Deere & Co (Daily)

Meanwhile, even with the copper price remaining strong amid production shortfalls across the largest copper producers, mid-tier copper miners like Hudbay (NYSE:HBM) continue to trade like lead weights.

Hudbay Minerals (Daily)

Something is broken out there, and it’s starting to feel like another shoe is about to drop. The leadership stocks/sectors of 1H 2026 ran out of steam in May/June, and they are now beginning to roll-over hard.

Meanwhile, we hear a lot about inflation being too high, but all I see over the last several weeks is asset price deflation and shockingly large declines in the latest CPI/PPI readings.

At the risk of stating the blatantly obvious, gold & silver are definitely not signaling that inflation is a concern. In fact, quite the opposite; the largest gold producers appear to be priced for another $400/oz-$500/oz of downside over the coming months.

We are two weeks away from the next FOMC decision, before the Federal Reserve takes nearly two months off. If the Fed doesn’t move interest rates on July 29th, it’s difficult to envision them doing so in September/October, ahead of a highly contentious midterm election in early November.

I simply don’t see the Fed risking a major monetary policy blunder so early in Chairman’s Warsh’s tenure. Moreover, there is simply too much uncertainty in the Middle East for the Fed to make a surprise decision against the backdrop of highly mixed and volatile economic data.

Earlier today I was telling a group of fellow investors that I’m starting to feel like I felt during the July/August 2008 market. The difference is that back in 2008, we knew there was a real estate and banking crisis. Most investors simply didn’t understand how dire the situation was.

Are we missing how dire something is today?

I’m interested to hear readers’ thoughts in the comments section.

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